Is Cherat Cement poised for growth?

Cherat Cement Company Limited (CHCC) has recently released its financial results for the fourth quarter of fiscal year 2024 (4QFY24), and the numbers have caught the attention of industry analysts and investors alike.

But what do these figures mean for the company’s future?

For the quarter ending in June 2024, Cherat Cement reported a profit after tax (PAT) of PKR 0.85 billion, a significant increase from the PKR 0.09 billion recorded in the same period last year.

This impressive growth translates to an EPS of PKR 4.40, a substantial rise compared to PKR 0.48 in the same quarter of the previous year.

Stronger margins amid rising costs

The company’s revenue grew by 10% YoY, primarily driven by higher retention prices and increased export dispatches.

Gross margins also saw a notable improvement, climbing from 21.36% in 4QFY23 to 28.15% in 4QFY24.

This boost in margins was largely attributed to effective coal inventory management, a key factor in controlling production costs.

However, it wasn’t all smooth sailing. The company’s distribution and administrative expenses rose by 26% and 16%, respectively, driven by inflationary pressures and higher axle load costs.

Additionally, although finance costs saw a significant reduction of 50% YoY due to a decline in borrowings, other operating expenses nearly tripled, increasing by 189% compared to the previous year.

Shareholder value

Despite these challenges, Cherat Cement has announced a final dividend of PKR 4 per share, bringing the total dividend for the year to PKR 5.5 per share.

This move indicates the company’s confidence in its financial stability and its commitment to returning value to shareholders.

Source: Darson Securities Limited