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PRESENTED BY:-

SAURABH JAIN
FMS, GOVT. ENGINEERING
COLLEGE, AJMER
To analyse the financial performance of
Shree Cement Ltd. through ratio
analysis and its comparison with the other
key cement players
Ticker : SHR

Country : INDIA

Major Industry : Construction

Sub Industry: : Cement Producers

Employees: : 1,982

BSE code : 500287

NSE Symbol : SHREECEM

Market Cap: : 41,405,783,774


Golden Peacock Award National Energy Conservation Award

Greentech Award , 2009 Excellence in water management


Multiple Brand Excessive
Strategy dependance
Efficient team Marketing mix
not proper
Exceptional
execution

Location Advantage Government Policy

Initiatives Threats of new entrants


Earning per share Dividend Pay- out ratio
Mar '09,
6.02
180
165.91 Mar '08,
160
12.52
140
120 Mar '07, Mar '05,
Mar '05
100 13.46 54.66
Rs. Mar '06
80 74.74
60 54.81 Mar '07
40 Mar '08
20 8.34 5.28 Mar '09
0 Mar '06,
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09 107.92
ye a rs

Current ratio

3 2.71
2.5 2.28

2
ratio

1.5 years
0.88
1
0.5
0
1 2 3
years
Inventory turnover raio

1.135443159
1.2
1 0.794174001
0.8 0.518410616
ratio 0.6
0.4
0.2
0
1
years

Operating Profit Ratio

40
35
OPR ( In % )

30
25
Operating Profit
20
34.14 Ratio
15 26.87 28.69
10
5
0
2005-2006 2006-2007 2007-2008
Years
R e t u r n o n N e t W o r t h ( in % ) N e t P ro fit R a t io ( In % )

40 3 6 .5 2 1 3 .4 3
35 14
30 12 9
2 4 .0 8
25 10
R e t u rn o n N e t W o rt h ( in
RONW ( In % )

20 8
% )
15 R a ti o i n %
9 .6 5 6
10
4
5
2
0
0
2 0 0 5 - 2 0 02 60 0 5 - 2 0 02 70 0 5 - 2 0 0 8 2007 2008
Year Ye a r
An increase in EPS is pointing towards favourable conditions to invest in
this company.

A decrease in the dividend pay out ratio suggests that the company is
distributing a lower portion of its earnings in the form of dividends and so
will be financially stronger and is likely to expand and grow at a faster rate.

A high current ratio in 2008 (2.28) is good from the creditor’s point of view
but extremely high current ratio is not good from the management point of view.
In such a case (1) more funds of the firm would be employed in unproductive uses
which don not fetch any return (2) it is an indicator of a firm’s poor investment
policy

A high inventory turnover/stock velocity indicates efficient management


of inventory because more frequently the stocks are sold, the lesser amount of
money is required to finance the inventory.
The higher value of debtors turnover shows that the Shree is becoming
more efficient in the management of debtors

The operating profit ratio of the Shree Cement Ltd. is continuously


increasing in the successive years and thus we can say that this company has
• .
been able not only to increase its sales but also been able to cut down its
operating expenses

A high return on equity indicates that the Shree is spending wisely and is
likely profitable.High returns on equity lead to higher stock prices.

The Net Profit ratio has increased in magnitude by 4.43 from 2007 to 2008.
This ratio not only reveals the recovery of the cost and expenses from the
revenue of the period but also leave a margin of reasonable compensation to the
owners for providing capital at their risk.

Book value per share has increased from 130.48 in 2007 to 193.13 in 2008
which is indicative of higher resources of the company. This company is a
potential bonus candidate in the long run