Shankara Building stock collapses 10% due to weak earnings guidance

Shankara Building Products lose another 10% on guidance of retail margin weakness. Shankara Building Products Ltd., which has lost around 70% of its market value in the past one year due to high valuation and weak earnings growth, expects more turmoil as it focuses on competition and improving its balance sheet.

Dec 03, 2018 09:12 IST India Infoline News Service

Shankara Building Products lose another 10% on guidance of retail margin weakness. Shankara Building Products Ltd., which has lost around 70% of its market value in the past one year due to high valuation and weak earnings growth, expects more turmoil as it focuses on competition and improving its balance sheet.

Sukumar Srinivas, managing director of Shankara Building, said in a conference call on November 30, 2018 that they plan to offer lowest price to their customers in order to become the “best priced store” and increase “cash sales” over credit, which will affect margins at least in the curent financial year, but will lead to a healthy balance sheet. Also, the strategy will ensure lower receivables, inventory and bank borrowings by March 2019.

The stock had jumped nearly five times in just nine months post its listing in April 2017. Higher raw material prices, heavy rain in south India, which led to weak earnings in the first half of financial year 2019, and a cut down in its expansion plan of the retail segment impacted the share price in the last one-year.

Shankara Building Products Ltd is currently trading at Rs626.15 down by Rs69.55 or 10% from its previous closing of Rs695.70 on the BSE.
The scrip opened at Rs668 and has touched a high and low of Rs679 and Rs626.15 respectively.

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