About the Company

DCM Shriram Industries Ltd is a part of DCM Shriram group, promoted by Bansi Dhar, is a diversified group with operations in Alcohol, Sugar, Organic and Inorganic Chemicals, Drug Intermediates, Tyrecord, Rayon, Shipping Containers and processed cotton yarn.

DCM Shriram manufactures rayons under Shriram rayons, sugar products under the name Daurala sugar works at Daurala sugar complex, and organics under Daurala organics.

DCM Shriram Industries Ltd is in a list of Multibagger Stocks in Dynamic Levels, DCM Shriram share price has touched a 52 week high of Rs. 192.90 on 13 -May-2016 and a 52 week low of Rs. 102.40 on 18-Sep -2015.

Business

Agri-Rural Business

• Fertilizer: DCM Shriram operates the dual feed LNG/ naphtha based Urea plant with a capacity of 3.79 lakh T.P.A., at its integrated manufacturing capacity at Kota. The plant is currently operating on 100% Natural Gas.
• Shriram Farm Solutions: Farm Solutions provides a complete basket of Agri-inputs, viz. Bulk fertilizers, Hybrid seeds, Micronutrients, Pesticides and other products, through its wide distribution network. The business also provides high quality agronomy services aimed at rising farmer productivity.
• Bioseed: Bioseed business is present across the entire value chain, i.e. Production, Processing, Extension activities, Research and Marketing with major presence in Philippines, Vietnam and India. DCM Shriram is present in both, Field and Vegetable Crops in India. In Vietnam and Philippines the business is present mainly in Corn. The Company has also started commercial operations for a Corn hybrid in Indonesia.

Sugar:Sugar business comprises four plants in Central U.P. with a combined capacity of 33,000 TCD. The business is supported by a Co-gen power facility of 94.5 MW.

Fenesta Building Systems manufactures door systems and UPVC windows (Un-plasticized PVC) under the brand “Fenesta”. The business provides total solutions starting from Design, manufacturing Fabrication to Installation at the customer’s site. As a part of its marketing initiatives, the business has set up self-own Fenesta branded showrooms in9 cities in India.

Hariyali Kisaan Bazaar: The Company has streamlined this business and discontinued the retail operations apart from for sale of fuel.

Cement:

DCM Shriram cement business is located at its Kota plant with a manufacturing facility of 0.4 Mn MT. The cement business leverages the throw away generated from the Calcium Carbide production process.

Chloro-Vinyl Business

• Chlor - Alkali: DCM Shriram’s Chlor-Alkali business comprises Caustic Soda (Lye and flakes), Chlorine and related chemicals including Stable Bleaching powder, Hydrochloric acid, Compressed Hydrogen and Sodium Hypochlorite. DCM Shriram’s manufacturing capacity at Kota (Rajasthan) and Bharuch (Gujarat) are supported by full coal based captive power. DCM Shriram total Chlor-Alkali capacity stands at 780 TPD.
• Plastics Business: A well integrated business, located at the Kota plant, it involves manufacturing of Calcium Carbide and PVC resins with captive production of Acetylene, Chlorine and Coal based power.

Other Businesses:

• PVC Compounding: The business operates under a Joint Venture with Axiall LLC (subsidiary of Axiall Corporation – a leading international manufacturer of Chloro-Vinyl) with effect from April 2014. The Capacity of this Business stands at 32,564 MT p.a.
• Textiles: T DCM Shriram he Company sold off its textile business that comprised a 14544 spindles spinning unit at Tonk in Rajasthan.

Financial

On quarterly basis the company’s net revenue from operations reached to Rs.1332.98 crores in Q4FY16 compared to Rs. 1309.25 crores in Q4FY2015 an increase of 1.81%.The operating profit stood at Rs. 98.53 crores in this quarter compared to loss of Rs. -3.16 crores in Q4FY15. The net profit for the quarter stood at Rs. 51.16 crores compared to loss of Rs. -40.19 crores same period last year, the increase in profitability is on back of decrease total expenditure from Rs. 1312.14 crores to Rs. 1234.45 crores.

Conclusion

In Sugar it is essential for the Government to set a fair and feasible regulatory framework, for which the industry is pursuing with the Government. DCM Shriram continues to work comprehensively with farmers and is ensuring timely payments for improving the capacity and superiority of cane supplies. Bioseed, Fenesta and Farm Solutions are focusing on high turnover growth with deeper customer engagement, wider product portfolio and extended geographic reach. DCM Shriram is confident of continuous growth in these businesses over the medium term. They have taken up expansion of Chlor Alkali capacity by 465 TPD (from 780 TPD to 1245 TPD) with corresponding addition of 60 MW of power generation capacity. In the Sugar business DCM Shriram is expanding power co-generation capacity by 17 MW. These projects are projected to cost Rs. 659 crores, to be completed by H2 ’17 and will strengthen their cost competitiveness and provide volume / profit growth.

As per our estimate, the stock at CMP of 175 is trading at P/E of 10.03, The Debt Equity ratio is 0.34 which indicates the company is operating with a rational level of debt and may not have problem to meet its obligations. The Interest coverage ratio is of 4.03 which indicate that DCM Shriram has been producing sufficient for the shareholders after servicing its debt obligations. The return on equity is 11.34 %.

On the basis of above factors we recommend a buy in DCM Shriram Industries Ltd long term with a target of Rs.215.

To get more Support and Resistance levels of the share please visit DCM Shriram Share Price Forecast