Dalal Street Investment Journal

Sagar Cements plunges over 12 per cent on disappointing Q4 results

Sagar Cements, a mid-sized Andhra Pradesh-based cement company, has plunged over 12 per cent on the BSE in early morning trade after posting a standalone net profit that has de-grown by 29.89 per cent at Rs 15.21 crore for the quarter ended March 31, 2016 as against Rs 21.70 crore in the corresponding quarter of the previous year.

The company’s standalone revenue has de-grown by 15.42 per cent at Rs 1,533.8 crore in Q4FY16. Its standalone operating profit (EBITDA) has declined by 30 per cent at Rs 27.78 crore along with operating profit margin contracting by 608 bps for the current quarter, i.e. at 16.81 per cent.

For the entire period of FY16, it has reported standalone net profit de-growth of 83.23 per cent at Rs 296.55 crore, while its revenue has grown by 13.43 per cent at Rs 621.76 crore. Net profit is showing a sharp de-growth due to the fact that in the previous year the company has earned net gain of Rs 349 crore from the sale of 6.52 lakh equity shares of Rs 10 each held by the company in Kalburgi Cement Pvt. Ltd. (formerly known as Vicat Sagar Cement Pvt. Ltd.). Its operating profit (EBITDA) has grown by 60.9 per cent at Rs 96.03 crore along with operating profit margin contracting by 456 bps for the current year at 15.45 per cent.

The company has acquired the entire shareholding in BMM Cement Ltd. for Rs 78.18 crore on August 27, 2015 pursuant to which BMM had become wholly owned subsidiary of the company, with effect from August 28, 2015. Therefore on consolidated basis, the company posted net profit of Rs 46.10 crore and revenue of Rs 753.42 crore in FY16. EBITDA has been reported at Rs 124 crore along with EBITDA margin at 16.46 per cent.

The company has not recommended any further dividend on the equity shares and the interim dividend has been already declared by them at Rs 5 per share in the month of March for saving tax on dividend income.