Shares of Shree Cement Ltd plunged 10% on Monday’s early trades to reach an intraday low of ₹ 22605.60 apiece amid reports about the company being under the scanner for alleged tax evasion to the tune of ₹ 23,000 crore. This is said to be the biggest tax evasion ever, to date. At 11:28 AM, its shares were trading at ₹ 23,141.55 (down 7.97%).
Shree Cement is one of the largest cement producers in India with an annual installed capacity of 47.4 MTPA. Moreover, it has an installed power generation capacity of approximately 752 MW. Its brand portfolio includes Roofon, Bangur Power, Shree Jung Rodhak, Bangur Cement and Rockstrong.
Last week, the Income-tax department initiated a survey action at five locations of the Kolkata-based cement manufacturer. These raids took place at its bases in Beawar, Jaipur, Chittorgarh, and Ajmer.
In an exchange filing, Shree Cement said that a lot of negative information about the company and its officials is floating in certain sections of the media in connection with the above survey. It said that the survey is still going on and that its entire management team is available and is extending full cooperation to the officials. Information circulating in the media otherwise is incorrect and has been published without seeking prior inputs from the company, it clarified
Shree Cement was formerly a part of the Nifty 50 index, however, it was replaced by Adani Enterprises in September last year, during the National Stock Exchange (NSE’s) semi-annual index rejig.
In Q4 FY23, the company reported a 15% year-on-year (YoY) decline in net profit at ₹ 546 crore compared to ₹ 645 crore in the same quarter last year. Sales for the March quarter grew 17% YoY to ₹ 4,785 crore, as compared with ₹ 4,099 crore in the corresponding quarter last year.
Shree Cement is a large-cap company with a market capitalization of ₹ 90,726 crores. It has a low return on equity of 7.04% but an ideal debt-to-equity ratio of 0.15. Its shares were trading at a price-to-earnings ratio (P/E) of 71.40, which is significantly higher than the industry P/E of 31.23, indicating that the stock might be overvalued as compared to its peers.
The company’s promoters hold a 62.55% stake in it, followed by retail investors with 13.25%, foreign institutions with 12.82%, mutual funds with 6.88% and other domestic institutions with 4.50%
Written By Simran Bafna
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