Gujarat Ambuja (GACL) has reported yet another good show for the second quarter ended December 31, 2001. The highlight of the result is the sharp rise in sales despite the slowdown in the economy.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (m)
Diluted Earnings per share*
The total clinker production was higher by 12% at 1.4 m tonnes against 1.3 m tonnes in the second quarter of the previous year. Similarly, production of cement was higher by 18% at 1.8 m tonnes against 1.5 m tonnes. Sales growth was led by higher sales in the domestic markets, which has increased from 1.2 m tonnes in 2QFY01 to 1.5 m tonnes in 2QFY02. Exports have also increased by 8%, thus contributing to almost 17% of sales in absolute terms. Thanks to the cartelisation effect, per bag realisation has remained more or less at the previous year's levels.
Margins have come down by 90 basis points on account of higher raw material costs pertaining to clinker purchases, which hitherto the company was manufacturing itself. Clinker costs as a percentage of total expenses stood at 5% in 2QFY02. But GACL has benefited from lower freight and forwarding costs, which have fallen from 26% of expenses last year to 20% in 2QFY02. Consequently, operating margins for the first half of the current fiscal has increased by 20 basis points. The interest expenses during the current period have declined by 33% on account of restructuring of the high interest bearing debt and retirement of debt.
The second stats…
The company in its press release has stated that cement demand would grow by more than 8% during FY02 in light of sustained demand from housing and road construction sectors. It has also stated that the growth in demand of cement has picked up very well during last 5 months and it has been growing at around 12%. For the first 9 months (April-December 2001), cement despatches of the industry have totaled to 74.5 m tonnes as against 69.4 m tonnes, an increase of 7%. The construction of green field cement plant (Maratha Cement Works) in Chandrapur district (Maharashtra) has been completed and trial production has commenced. This would enable the company to post higher growth in sales in the second half of the current fiscal.
The stock currently trades at Rs 213 implying a P/E multiple of 14.2x annualised 2QFY02 earnings.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407