LIC-Backed Stock Declares 130% Dividend For FY24; Buy The Chemical Shares?

Having released its FY24 financial results and recommended a 130% final dividend, market watchers are focusing on DCM Shriram, a diversified firm featured in the S&P BSE 500 index in which LIC holds a stake of 6.76%. The Agri-Rural Business, which includes Urea, Sugar, and Ethanol; the Farm Solution Business, which covers the full spectrum of inputs; and R&D-based Hybrid Seeds are just a few of the sectors that DCM Shriram's business portfolio covers.

DCM Shriram Dividend

The Board of Directors "Recommended final dividend of 130% i.e. Rs.2.60/- per equity share of face value of Rs.2/- each for the financial year ended March 31, 2024, subject to the declaration of the same by the shareholders in its forthcoming Annual General Meeting (AGM), which if declared by the shareholders, the total dividend for the Financial Year 2023-24 aggregates to 330% i.e. Rs.6.60/- per equity share of Rs. 2/- each (including an interim dividend @ 200% i.e. Rs.4.00 per equity share of Rs. 2/- each declared by the Board in February, 2024.) The final dividend, if declared by the Shareholders at the ensuing AGM will be credited / dispatched within 30 days from the date of the AGM," said the company in a regulatory filing.

July 9, 2024, has been fixed as the record date for the purpose of payment of final dividend, if declared by the shareholders in its 35th Annual General Meeting. The 35th AGM of the shareholders of the company is going to be held on July 16, 2024.

DCM Shriram FY24 Results

For the fourth quarter that ended on March 31, 2024, the company recorded a 36.9% year-on-year (YoY) decline in net profit, to Rs 117.8 crore, from Rs 186.7 crore in the same quarter of the previous fiscal year. In Q4FY24, the business's revenue from operations dropped 11.8% to Rs 2,399.3 crore, compared to Rs 2,720 crore in the same period in the previous fiscal year, Q4FY23. In comparison to Rs 405.3 crore during the same period in FY23, EBITDA plunged 22.7% to Rs 313.1 crore in the fourth quarter of FY24.

Mr. Ajay Shriram, Chairman & Senior Managing Director and Mr. Vikram Shriram, Vice Chairman & Managing Director, said "Global economic uncertainties continue to escalate with the addition of conflict in the middle eastern region. Consequent supply chain disruptions and market volatility may lead to deferment of rate cuts by the central banks and this might have an adverse impact on the overall business sentiments globally. India is better placed in terms of healthy and steady GDP growth albeit not immune to these conditions. Our Company with its diverse set of businesses, continuous focus on cost efficiency and strong balance sheet has demonstrated that it is well equipped to handle the uncertain business environment."

"Chemical business is adversely impacted due to margin pressures led by sub optimal ECUs, a resultant of excess domestic capacities and low global prices. Global PVC prices continue to be subdued owing to dumping of cheap PVC by China. Sugar business is stable although sugar prices are not yet commensurate to the increase in SAP in UP. India's stock levels are expected to be higher than last year in spite of overall lower production and higher consumption, due to restriction on exports and B heavy / cane Juice ethanol. The adverse weather has led to lower Sugarcane crush and recovery in the current season resulting in lower production at industry level," Ajay Shriram commented.

"Fenesta and Shriram Farm Solution businesses continue to grow at a healthy pace. Bioseed India business has turned positive. Our capex in Chemical business is nearing completion. We have commissioned 850 TPD Chlor-alkali project. Other projects will be commissioned over Q1 and Q2 of FY 25. Expansion of sugar capacity and CBG project in Sugar business are progressing as per schedule. Sustainability remains at the core of our business philosophy and our acts are directed towards environment stewardship in the areas of energy efficiency, water conservation and supporting the circular economy. The commissioning of new projects in the Chemical business will usher in a new era of growth. We continue to evaluate adjacencies to enhance our portfolio in our core businesses," the management further added.

DCM Shriram Share Price Target

Deven Mehata - Equity Research Analyst at Choice Broking said DCMSHRIRAM is currently trading at Rs 970. The stock is exhibiting a sideways trend within the range of Rs 930 to Rs 1030, with immediate support levels identified at Rs 925. A prudent strategy would be to consider buying on dips if a reversal is observed from these support levels.

The overall trend of the stock remains sideways, supported by a consistent pattern of equal highs and equal lows on the daily chart. Additionally, lower trading volumes indicate a clear indication of a sideways trend. If the price manages to close above the Rs 1050 level, it may pave the way for an upward movement towards the target level of 1150 and beyond. This is a positive development, as it signifies a potential change in the stock's trend.

The Relative Strength Index (RSI) is currently trading flat at 56.44, suggesting that the stock is still in a sideways phase. The stock is presently trading above the 20-day and 50-day exponential moving average (EMA), indicating a slight bullish momentum.
Immediate hurdles on the upside are identified at Rs 1050. Investors are advised to hold their long positions with a trailing stop-loss (SL) set at Rs 925.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.