Shree Cement Q2 Results: Profit Rises 77% Led By Lower Costs

Shree Cement Ltd.’s quarterly profit rose amid lower expenses and depreciation.

Net profit increased 77.1% year-on-year to Rs 547.25 crore in the quarter ended September, the company said in an exchange filing. Analysts’ estimates tracked by Bloomberg had pegged profit at Rs 371.4 crore.

• Revenue rose 7.8% year-on-year to Rs 3,022.4 crore—higher than the estimated Rs 2,972.6 crore.
• Earnings before interest, taxes, depreciation and amortisation rose 17% over last year to Rs 988 crore.
• The cement maker also saw its operating margin widen to 32.7% from 30.1% earlier.

Shree Cement’s operational performance improved, despite lower pricing, mainly due to a fall in costs. Power and fuel costs as a share of net sales dropped to 15.7% from 21.3% earlier.

The company’s finance costs and depreciation, too, fell compared to last year. Finance costs were down 13% year-on-year at Rs 62.7 crore. Depreciation declined 35% over last year to Rs 278.6 crore. The cement maker also saw a Rs 10.3-crore tax reversal during the quarter that aided the bottomline.

The Kolkata-based firm was able to improve its volumes during the quarter by keeping a check on prices. Volumes increased 16.5% over last year to Rs 6.4 metric tonnes. Realisation—which is the operating profit it makes for each tonne—stood largely flat at Rs 1,543 crore.

While cost cuts and pricing discipline have helped lift cement makers’ earnings, the focus will be back on the core business as demand in the economy returns to pre-Covid levels. Fuel and logistics costs are rising at a time when urban consumption is increasing. That could rein in the cement maker’s pricing power.

Shares of Shree Cement closed 0.62% higher on Wednesday, while the benchmark BSE Sensex closed 0.73% up.