DCM Shriram at new high

DCM Shriram is a bright star in this grey-clouded market currently. The stock hit a new 52-week high today at Rs.174.80 with volumes spiking up over 3.5 times.

The stock has hit a new high on the back of its very good performance for Q4FY16. The company has posted an excellent set of numbers – it’s a turnaround; consolidated net profit came in at Rs.51 crore v/s loss of Rs.40 crore in Q4FY15. This was on a muted 2% jump up in total income at Rs.1333 crore. The main contributor was the sugar business whose earnings improved to Rs.57 crore from (-)Rs.56 crore in Q4FY15. Better sugar prices, lower production and higher sugar recoveries is what helped the boost up.

Its chloro vinyl business also did well with, showing a 35% jump in earnings due to higher realization, lower raw material costs. The third segment, fertilisers raked in Rs.6 crore which is much better than last year when this segment was shut down for maintenance. Thanks to all this, its EBITDA showed an over 5 times jump at Rs.121 crore and margins showed a spectacular rise from 1.8% to 9.1%.

Looking ahead, for FY17 earnings, sugar will remain the biggest grosser, followed by chlorovinyl. Fertilsier adds only a fraction to the earnings.