DCM Shriram stock ends 8.5% lower despite Q1 PAT jumps two-fold at Rs158cr

Chemical revenues up 76% and Fenesta up 168% led by volumes.

Jul 20, 2021 04:07 IST India Infoline News Service

DCM Shriram Ltd has announced its Q1 FY22 financial results on Tuesday.

Performance at a glance:

Net Revenue up 2% YoY:
  • Chemical revenues up 76% and Fenesta up 168% led by volumes
  • Vinyl revenues up 128% driven by prices
  • Sugar Business revenues down 36% due to lower volumes of Sugar
PBDIT up 56% YoY:
  • Vinyl PBDIT at Rs90cr vs Rs7cr during same period last year led by higher prices.
  • Chemicals PBDIT Rs113cr vs Rs61crduring Q1 FY21 led by volumes and prices
  • Sugar Business PBDIT Rs42cr vs Rs90cr during Q1 FY’21 led by volumes 
Project Investment:
  • Grain based Distillery at Ajbapur Sugar unit, with a capacity of 120 KLD at a capital expenditure of Rs145cr.
  • Initiate the 700 TPD Chlor-alkali capacity expansion project along with 500 TPD Flaker plant.
Key Developments and Outlook
  • Net Revenues (net of excise duty) stood at Rs1,957cr for Q1 FY’22 vs Rs1,912cr in Q1 FY’21:
  • PBDIT for Q1 FY22 up 56% YoY at Rs300cr
  • PAT for Q1 FY22 at Rs158cr vs Rs69cr during Q1 FY21.
  • Net Debt at 30th June, 2021 stood at Rs122cr vs Rs1,167cr at 30th June, 2020 and Rs180cr on 31st March 2021. The reduction in debt over June 2020, resulted from lower sugar inventory and significantly lower fertilizer subsidy outstanding. Our prudent approach to Capex and working capital management across businesses also led to lower net debt.
  • Long Term credit rating upgraded to AA+ (from AA) by ICRA during the quarter and Short term rating of A1+ was reaffirmed. CRISIL rating is A1+ on short term rating scale.
  • ROCE came in at 20.8% in Q1 FY22 vs 18.0% in FY 21.
Commenting on the performance for the quarter ending June 2021, in a joint statement, Ajay Shriram, Chairman & Senior Managing Director, and Vikram Shriram, Vice Chairman & Managing Director, said, "The performance during the quarter was robust despite the challenges of second wave of Covid-19 pandemic.

Our businesses have shown resilience to the disruptions caused by pandemic and have continued to operate at normal levels. The overall economic activity in the Country was significantly better than the same period last year, enabling better performance.

In line with our strategy to grow the scale, integration and cost efficiencies of our businesses, we have taken further steps in the direction. We are expanding our Ethanol capacity with a new 120 KLD Grain based Distillery at our Ajbapur Sugar unit. We have now decided to initiate the expansion of 700 TPD Chlor-alkali capacity along with 500 TPD flaker plant at the Bharuch complex that was put on hold because of uncertainties caused by Covid-19 pandemic.

We are optimizing the configuration from our under construction 120 MW power plant at Bharuch to sell up to 90 TPH steam. We are also replacing three electrolyseRsat Kota Chemical unit which will be more efficient and are on latest NCZ technology, to reduce power consumption and marginally increase capacity. All these steps will further strengthen our businesses.

Chloro-Vinyl and Fenesta businesses are facing cost pressures given the rise in Input prices, the Company continues to take active steps to improve cost structures and sustain reasonable margins.

Our Chlor-Alkali business has witnessed modest improvement in demand and prices. In Vinyl and Sugar prices, continue to be stable. Shriram Farm Solution and Fenesta business are enlarging their product portfolio and are witnessing good demand. Bioseed India business has faced headwinds in the current season, however, we feel it will grow well over the medium term."

DCM Shriram ended at Rs963.55 apiece down by Rs90.9 or 8.62% on Sensex.

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