Shree Cement’s Q1 net halves on high power and fuel costs

consolidated profit for the April-June quarter halved year-on-year despite revenues growing by double-digits as high energy costs hurt margins.

The company reported a consolidated top line of Rs 4,415 crore, up 22% year-on-year. However, consolidated profit declined by 56% to Rs 280 crore.

Earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 22% to Rs 801 crore. EBITDA margin narrowed by 10 percentage points to 18.1%.

The company’s stock took a beating following the earnings announcement, ending the day 3.1% lower at Rs 20,368.05 on the BSE. Benchmark Sensex closed 1.87% higher.

In a recent research report, analysts at Investec said that the company enjoys premium multiples on the back of a perceived moat of capex and opex intensity, but the moat was slowly getting eroded.

“(Shree Cement’s) recent greenfield capex plans indicate high capex intensity versus peers,” the analysts led by Ritesh Shah said. Further, the company’s moat was on its superior cost curve versus peers, but the cost differentials were eroding, they said.

trades at a PE multiple of 31.51 compared to Ultratech’s 25.85 and Dalmia Bharat’s 26.16.

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