DCM Shriram down in the deep

DCM Shriram is down in the deep red today morning, following its dismal earnings for Q4FY18. The stock price fell 12.5% to Rs.384.40 but has recouped from this low level. Its 52-week low is at Rs.334.

The company’s performance was hit by lower sugar and molasses prices, it was down 13% and 9% respectively as cane prices increased. The company also took an inventory write down of Rs 185 crore as selling prices substantially below costs.

For Q4FY18, the company posted a 3% (YoY) drop in revenue at Rs.1566 crore and net profit fell 67% at Rs.51 crore.

In sugar unit, there was a loss of Rs.127 crore v/s profit of Rs.141 crore at EBITDA level. There was a charge of Rs 163 crore during the quarter (Rs 185 crore for FY18) as prices fell below cost of production. The present sugar prices are about Rs 2,800/ qtl vis-à-vis cost of over Rs 3,500/ qtl. c). Even its Plastics unit did not fare well   – Production & Costs of Carbide/ PVC adversely affected consequent to ban on use of Petcoke by Hon’ble Supreme Court (use allowed thereafter).