DCM Shriram rallies 20% on heavy volumes, stock hit all-time high

Shares of DCM Shriram moved higher by 20 per cent to hit an all-time high of Rs 663.89 on the National Stock Exchange (NSE), in the intra-day trade on Friday, on the back of heavy volumes. The stock has surpassed its previous high of Rs 637, touched on May 23, 2019.

At 12:39 pm, it was trading 17 per cent higher at Rs 651 compared to a 0.46 per cent rise in the Nifty50 index. Trading volumes on the counter jumped nearly four-fold with a combined 2.8 million equity shares changing hands on the NSE and BSE.

DCM Shriram is engaged in diversified businesses of sugar, shriram farm solutions, fenesta, cement and chlor-alkali.

In the past three months, DCM Shriram has rallied 67 per cent after the company reported a strong operational performance for the quarter-ended December 2020 (Q3FY21). In comparison, the Nifty50 index has gained 1 per cent during the same period.

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 reported 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.

Further, 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 fall in revenue was cushioned by income from vinyl business, Shriram farm solutions (SFS) value added product business and Fenesta Business.

While announcing Q3FY21 results on January 19, the company had said sugar business will utilize Ajbapur distillery for full current season, which along with better ethanol prices will help in partly offsetting the impact of lower sugar cane recovery. "Shriram farm solutions, Bioseed and Fenesta are focusing on expanding the product portfolio and market development activities which will enable them to enhance their growth momentum," it said.

The board had also 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.