DCM Shriram rallies 24% in one week on strong operational performance in Q3

Shares of hit a fresh 52-week high of Rs 495, surging 8 per cent in the intra-day trade, on the BSE on Monday on the back of a strong operational performance for the quarter-ended December 2020 (Q3FY21). The stock has rallied 24 per cent in the past one week, as compared to a per cent rise in the S&P BSE Sensex.

The company’s consolidated PBDIT (profit before depreciation, interest and tax) was up 30 per cent at Rs 421 crore in Q3FY21, as against Rs 323 crore in Q3FY20. PBDIT margin also expanded by 478 basis points (bps) to 19.5 per cent compared with 14.7 per cent in the corresponding quarter of previous fiscal.

“The company has witnessed a sequential improvement in its quarterly performance as the challenges posed by Covid-19 have reduced. This quarter has been particularly robust wherein almost all are businesses operated at normal levels,” the management said.

Meanwhile, the company’s profit after tax during the quarter under review increased by 44 per cent year on year (YoY) to Rs 253 crore from Rs 175 crore in the year-ago quarter. Net revenues from operations, however, declined 1.6 per cent to Rs 2,159 crore from Rs 2,195 crore due to lower revenues from sugar and chemicals segments. The revenues were positively impacted by vinyl business, Shriram farm solutions (SFS) value added product business and Fenesta Business.

That apart, the board has approved new projects with an investment of Rs 1,000 crore. These projects will be implemented at the existing site of Bharuch Gujarat.

The management said the objective is to foray into downstream Chemicals, linked to the company’s chlor-alkali business. “Further the multipurpose product research & development center is being set up to enable forward integration of existing products and new products i.e. Epichlorohydrine (ECH) and Hydrogen peroxide (H2O2). This will also set up our base for other value added chemicals going forward,” it said.

At 11:00 am, the stock of was trading 6.5 per cent higher at Rs 488 on the BSE, as compared to a 0.10 per cent gain in the S&P BSE Sensex. Trading volumes on the counter more-than-doubled with a combined 510,000 equity shares having changed hands on the NSE and BSE till the time of writing of this report.

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