Important Note
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Introduction
Incorporated in the year 1944 at Digvijaygram (Sikka), Shree Digvijay Cement Ltd. is engaged in the manufacturing and sale of Ordinary & Special Portland cement. In November 1962, a factory was commissioned to produce asbestos cement pipes and sheets, with Johns Manville Corporation, US, serving as the technical consultant and sole selling agent in West Asian and African nations. Shree Digvijay Cement Limited (SDCL) commenced commercial cement manufacture in 1949, promoting Lotus cement as its brand name.
Since 2019, the company has been a part of True North, formerly known as India Value Fund Advisors (IVFA). True North Fund VI LLP acts as the Promoter of the company.
Today, SDCL stands as a pioneer in cement manufacturing in India, boasting an licenced capacity of 3 million tonnes per year and a Fully Automatic Modern Cement Plant. Its factory holds ISO 9001, ISO 14001, and OHSAS 18000 certifications. Moreover, SDCL was among the first Accredited Companies to receive a prestigious license from the American Petroleum Institute (API) for the production of Oil Well Cement – API 10A Class G HSR Cement.
SDCL has been at the forefront of supplying high-quality Ordinary and Special Portland Cement. With a workforce of over 300 employees and a network of more than 1,000 channel partners across Gujarat, it markets cement under the brand name “KAMAL CEMENT.”
SDCL offers a unique blend of product excellence and customized logistics solutions through a combination of roadways, railways, and captive seaports. Its Captive Seaport is equipped to handle boats ranging in size from 3,000 to 5,000 DWT along the jetty. A secure anchorage for boats weighing 5,000 to 35,000 DWT is accessible within 5 kilometers from the port/wharf location. At a distance of 10 kilometers from the port site, a water depth of 20-25 meters ensures safe mooring of boats weighing 50,000 – 100,000 DWT.
Business Products
Different types of cements manufactured by SDCL
TASC (Technical Assistance and Service to Customers)
This service offered by SDCL is truly unique in its nature. The Technical Services Team, recognized as leaders in their field, works closely with customers to ensure that products not only meet but exceed the requirements of their projects. This team provides comprehensive pre- and post-sales support, collaborating closely with clients throughout the entire process.
Kamal Cement delivers technical assistance and services before, during, and after product usage through a highly trained team of Technical Service personnel and specialized Technical Services Mobile Vans Laboratories. The Technical Services Team conducts performance testing to enhance product efficiency, analyzing all components, aggregates, and additives.
Moreover, we provide theoretical and practical on-the-job training to our clients’ technical personnel, enhancing their technical proficiency and capabilities.
Capacity expansion
Financials
For Q3FY24
- In December 2023, the Net Sales amounted to Rs. 191.30 crore, reflecting a decrease of 7.33% compared to Rs. 206.44 crore in December 2022.
- The Quarterly Net Profit in December 2023 stood at Rs. 31.40 crore, marking a significant increase of 208.22% from Rs. 10.19 crore in December 2022.
- EBITDA for December 2023 stood at Rs. 51.11 crore, showing a substantial rise of 200.82% from Rs. 16.99 crore in December 2022.
- Shree Digvijay’s EPS rose to Rs. 2.15 in December 2023 from Rs. 0.71 in December 2022.
For the year ended March 23
- The Company’s total income for the year reached a record Rs. 731.92 crore, marking a 15.57% increase over the previous year driven by higher sales volume.
- EBITDA for March 2023 stood at Rs. 101 crore, down 14% from Rs. 117 crore in March 2022.
- Profit before tax for the year amounted to Rs. 710.02 crore, compared to Rs. 882.05 crore in the previous year.
- Profit after tax for the year was Rs. 577.13 crore, up from Rs. 552.91 crore in the previous year.
- During the year under review, cement production reached 1,274,000 metric tonnes (MT), compared to 1,199,000 MT in the previous year. Clinker production amounted to 974,000 MT, up from 958,000 MT in the previous year. The Company achieved record-high cement sales of 1,259,000 MT, surpassing the 1,202,000 MT sales figure of the previous year.
- During the year, the paid-up Equity Share Capital of the Company increased from Rs. 1,44,02,77,780/- (14,40,27,778 Equity Shares of Rs. 10/- each) to Rs. 1,45,20,27,780/- (14,52,02,778 Equity Shares of Rs 10/- each). The increase in share capital was on account of issue and allotment of fresh 11,75,000 equity shares of face value of Rs. 10/ each, arising out exercise of equivalent no. of stock options by eligible employees of the Company under “SDCCL Employee Stock Option Plan 2019” (“ESOP Plan”).
- Thus, the aggregate dividend for the year 2022-23 is Rs.4 (i.e. @ 40%) per equity share of Rs. 10/- each with a total pay-out of Rs. 5,794.61 lakhs and pay-out ratio of 40%.
- As of March 31, 2023, cash and cash equivalents amounted to Rs. 1238.89 lakhs (excluding fixed deposits of Rs. 9953.81 lakhs for a term exceeding 3 months), compared to Rs. 1285.29 lakhs in the previous year (excluding fixed deposits of Rs. 7992.15 lakhs).
- The total cash and bank balance as of March 31, 2023, stood at Rs. 11192.70 lakhs, compared to Rs. 9277.44 lakhs in the previous year.
- During the year, the Company obtained Long Term and Short-Term Credit ratings from CRISIL for a total bank loan facility of Rs. 100 crores. CRISIL assigned a long-term rating of CRISIL A/Stable and a short-term rating of CRISIL A1.
Management’s Comments
The growth was recorded mainly due to higher sales volume and sustainable plant operations. Combined with the highest ever blended and special products sales led to the consolidation of top line growth and profitability. Improved plant performance by debottlenecking & asset optimisation and keeping the cost under control increases productivity and profitability.
India is the world’s second-largest cement producer, accounting for over 8% of global installed capacity. The country’s infrastructure and construction sectors offer significant growth opportunities for the cement industry, driven by rising rural housing demand and industrial sector expansion post-COVID-19.
Key Highlights:
– India’s cement production capacity stands at 553 MTPA, with current production at 298 MTPA.
– The country possesses abundant limestone deposits, ensuring substantial growth potential for the cement sector.
– India has 210 large cement plants, with significant concentrations in Andhra Pradesh, Rajasthan, and Tamil Nadu.
– Cement production distribution: 32% in South India, 20% in North India, 13% in Central India, 15% in West India, and 20% in East India.
– Expected CAGR for cement production and consumption between FY16-22: 5.65% and 5.68%, respectively.
– Crisil Ratings forecasts an addition of ~80 MT capacity by FY24, driven by increased spending on housing and infrastructure projects.
Note: Shree Digvijay Cement has been recommended multiple times on DarkHorseStocks. Initially suggested around Rs. 71, it has since reached an all-time high of Rs. 124, delivering a remarkable 75% increase post-suggestion.
Conclusion
Shree Digvijay Cement, an 80-year-old company, is a completely debt-free, cash-rich company operating in the cement manufacturing and sales sector. The company has achieved impressive results, marked by its highest-ever quarterly profit. Additionally, Shree Digvijay boasts a robust financial position with a cash balance exceeding 100 crores. Moreover, the management has secured approval for expansion plans that will more than double the company’s capacity. Despite a decreasing promoter holding, Shree Digvijay Cement remains an enticing prospect, supported by its strong working capital and capable management. Overall, the company presents an attractive investment opportunity.