Shree Cement – Growing More than Industry Average

Shree Cement - Latest Results

(in Cr.)
Sep-11
Jun-11
FY10-11
Revenue
856.07
1,034.08
3,514.13
Net Profit
38.49
55.01
209.7
EPS
11.05
15.79
60.19
Cash EPS
57.53
61.65
254.17
OPM %
23.56
24.27
25.15
NPM %
4.5
5.32
5.97
 
 
 
 
Shree Cement - Latest Results

Shree Cement - Share Price Movement

Weekly H/L
2,183.40
2,032.00
Monthly H/L
2,200.00
1,881.00
52 Weeks H/L
2,200.00
1,504.75
 
( 30 Dec 11 )
( 11 Feb 11 )
Delivery / Var+ELM %
61.19
12.5
 
 
 
Shree Cement - Share Price Movement

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Shree Cement – Growing More than Industry Average

Shree Cement – Growing More than Industry Average
Shree Cement – Growing More than Industry Average | Source

Shree Cement – Growing More than Industry Average


Net profit triples over last year’s figure

Shree Cement has produced poor results for the second quarter ended 30.09.11 as compared to the quarter ended 30.06.11. Both revenue and net profit have come down (see tables of Shree Cement). But if we compare the results in the same period last year, it has improved now. Net profit has tripled to Rs.38 crore as compared to Rs.11 crore in the corresponding period of the previous year. Net sales have increased by 19% to Rs.856 crore. The shares of Shree Cement are traded in the Indian Stock Markets at Rs.2080.30 now (BSE 09.01.12). The shares of Shree Cement are available in both BSE and NSE. 143 shares were traded on 09.01.12 in the NSE.

Share price has already discounted future earnings

Cement production and despatches increased during the quarter by 14% as against all India growth of only 6%. The company would have performed still better but for the cost of inputs like coal and fly ash increasing steeply thereby squeezing the margins. After the publication of the results, cement prices have increased further which will be reflected in the third quarter results ending 31.12.11. Cement prices have reached an all-time high of Rs.280 for a 50 kg bag. Definitely the company’s results should be still better in the third quarter. The results are expected at any time from now. But the share price has already discounted the expected good results and investors should not hurry to purchase the shares at this high price. As peak construction period arrives, the price may still more rise. All these things augur well for the cement industry and the company.

Power division growing

Shree Cement has in addition to cement division, a power division also. New Delhi is a key cement market for the company. Shree Cement has a captive power capacity of 260 MW at the end of 2010-11. Now the capacity has gone up to 560 MW as the company commissioned the additional capacity in phases. The company has also entered into agreements with many States in North India for supply of power. The power division contributed around 17.5% of the turnover in Q1. Now this share will proportionately go up as additional capacity has been commissioned.

Buy at declines and accumulate

The shares of Shree Cement are highly priced now. Investors should not enter into the scrip at this price. They should wait for the share price to cool and can purchase it at around Rs.1500. They can accumulate the scrip at every decline thereafter for a targeted price of around Rs.2000 – Rs.2200.

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