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Shree Cement dips 4% post June quarter results; here’s what brokerages say

Shares of Shree Cement slipped 4.70 for every cent to Rs 21,335.forty on the BSE soon after the company’s consolidated net profit dropped thirteen.5 for every cent on a 12 months-on-12 months (YoY) foundation to Rs 330.35 crore for the June quarter of FY21 (Q1FY21). In comparison, the firm had posted a profit of Rs 382 crore in the 12 months-back quarter.

The company’s income dipped 24 for every cent YoY to Rs two,480 crore from Rs 3,302 crore in Q1FY20. On the operational entrance, earnings in advance of desire, tax, depreciation, and ammortisation (Ebitda) slipped 22.3 for every cent to Rs 700 crore although Ebitda/tonne stood at Rs one,422. Ebitda margin expanded to thirty.one for every cent from 29.seven for every cent.

“During the quarter ended thirtieth June, 2020, company’s Indian operations were being partly afflicted due to lockdown announced on account of Covid -19 pandemic by condition and central authorities. The firm has taken into account the achievable affect of Covid-19 in preparing of the fiscal results,” the firm stated in an exchange filing.

“As the condition of pandemic is nonetheless continuing, the extent to which the same will affect Company’s long term fiscal results is at present unsure and will rely on further developments,” it stated.

At 10:27 AM, the stock was trading 3.88 for every cent decreased as in comparison to .8 for every cent attain in the S&P BSE Sensex.

Nirmal Bang preserved ‘SELL’ on the stock but elevated its target rate to Rs eighteen,659 from Rs eighteen,189 previously.

“Shree Cements has claimed good set of quantities for 1QFY21. Ebitda at Rs 700 crore was 3.4 for every cent larger than our estimate but a variety of functioning parameters were being decreased than expectations. Revenue at Rs two,325 crore declined by 23 for every cent YoY as volume declined by eighteen.6 for every cent YoY while realization declined by 5.nine for every cent YoY,” the brokerage stated.

“We feel that as the overall economy returns to normalcy from the Covid shock, the recent pent-up demand from customers from the rural phase will subside. Bigger pricing is also probable to tumble as offer constraints reduce and monsoon affect on demand from customers kicks in. The stock is at present trading at elevated multiples of 22x FY22E EV/EBITDA and hence we would hold out for a correction to evaluate our rating on the stock,” it stated.

Kotak Securities stated Shree Cement’s Q1 performance was ‘subpar’ but that it was too early to extrapolate.

“SRCM’s 1QFY21 Ebitda was weaker than our estimates led by decreased realizations. Volumes outperformed sector with 19 for every cent yoy decline even so, realization was weaker than peers with a decline of 6 for every cent yoy. Fees, too, noticed a sequential improve as opposed to a decline by most peers. We imagine it is too early to be involved on SRCM’s potential to keep its price and margin management posture however, margin of safety is lower given high quality valuations. Sustain Provide,” it stated.

Analysts at Motilal Oswal stated,”When we hold our estimates mainly unchanged, we see difficulties related to in the vicinity of-term margins for SRCM. These pertain to the hike in price, but decline in rate in its functioning locations. The equilibrium sheet should, even so, reinforce further on limited capex beneath execution. We maintain Neutral as the recent valuation (16.8x FY22E EV/EBITDA) does not provide any upside.”.