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Higher effective tax rate dented the performance of Shree Cement in the quarter ended September 2017. Shree Cement has posted 27% slide in net profit to Rs 211.50 crore in spite of 4% jump in total income from operation to Rs 2,136.83 crore for second quarter ended September 2017. The surge in freight & forwarding expenses, power & fuel expenses and raw material costs resulted in the contraction in OPM by 800 bps to 26.2%. Thus, operating profit shrank by 20% to Rs 560.47 crore.
Performance for the quarter ended September 2017
Total income from operation (including the power segment revenue) inclined 4% to Rs 2,136.83 crore for the quarter ended September 2017.
The Operating Margin (OPM) reduced by steep 800 bps to 26.2%. The reduction in OPM was due to spike in freight & forwarding expenses by 570 bps to 24.8%, power & fuel cost by 230 bps to 19.2%, raw material cost by 60 bps to 7.9%, and employee benefit cost by 30 bps to 6.8% as percentage to sales and net of stock adjustments. As a result, the operating profit dropped 20% at Rs 560.47 crore.
The other income inclined 27% to Rs 99.51 crore. The interest cost rose by 29% to Rs 37.95 crore but depreciation went down 48% to Rs 225.25 crore. Thus, the PBT inclined by 25% to Rs 396.78 crore. The net tax expenses surged 599% Rs 185.28 crore. The effective tax rate for the quarter escalated to 46.7% from 8.3% corresponding previous quarter. Thus, the Net profit fell 27% to Rs 211.50 crore.
Half yearly performance
Total revenue (including the power segment revenue) inclined 10% to Rs 4,708.24 crore for the six month ended September 2017. OPM reduced by 710 bps to 27.1%, thus, OP slid by 13% at Rs 1,273.73 crore. Other income grew by 32% to Rs 196.90 crore. The interest cost increased by 24% to Rs 70.85 crore. The depreciation went down 22% to Rs 456.40 crore. Thus, the PBT decreased 2% to Rs 943.38 crore. With the tax outgo of Rs 291.77 crore as against tax outflow of Rs 165.87 crore corresponding previous period, the net profit dropped by 18% to Rs 651.61 crore.
Annual Financial Performance
For the financial year ended March 2017 (FY 2017), total revenue (including the power segment revenue) inclined 20% to Rs 9496.52 crore. The gain in topline was due to jump in revenue from cement segment by 25% to Rs 8924.11 crore (86% of total revenue) while power business segment revenue declined by 7% to Rs 1455.89 crore (14% of total revenue).
The Operating Margin (OPM) expanded by 260 bps to 22.3%, thus, the operating profit grew by 34% at Rs 2367.23 crore. Other income dropped 29% to Rs 507.71 crore. The interest cost increased by 27% to Rs 129.42 crore. The depreciation went up 14% to Rs 1214.71 crore. Thus, the PBT before EO gained 17% to Rs 1530.81 crore.
EO expenditure was NIL as against EO outgo of Rs 23.99 crore in the corresponding previous period, as a result, PBT after EO rose by 19% to Rs 1530.81 crore. With the tax outgo of Rs 191.70 crore as against tax outflow of Rs 36.41 crore corresponding previous period, the net profit rose by 7% to Rs 1339.11 crore.
The scrip is currently trading at Rs 18,628.95 (08 November 2017) on the BSE.
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