X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Cement – The leaders and laggards - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Apr 14, 2000

    Cement – The leaders and laggards

    The cement business, as against valuations, has performed well over the last year and a half. Although cement prices have remained under pressure, demand has been buoyant. Infact production grew 15% to touch 94 million tonnes in FY00. Demand grew 14.7% at 93.8 million tonnes.

    (million tonnes) Capacity
    ACC 11.4
    Guj Ambuja 5.0
    Madras Cements 2.8

    A study to compare the employee productivity across three leading cement companies brings to the fore an interesting picture. At Associated Cement Companies (ACC), while the employees are paid the highest, they are the least productive in terms of output per head. Ditto in case of net profits per employee. At the other extreme is Gujarat Ambuja, which is considered to be one of the most efficient cement companies in Asia. The company's net profit and revenues per employee are the way ahead of its other two competitors. And interestingly, its payout per employee is lower than that at ACC. The net profit margins (NPM) reflect the sharp divergence between the two companies. Madras Cements seems to have effectively controlled its employee costs, but in efficiency levels, the company falls way short of Gujarat Ambuja.

    Another interesting point is that all three companies recorded a rise in turnover between FY97 and FY99 (slowdown in domestic economy). However their profits during the period took a dip, with Madras Cements suffering the most.

      Wages Sales Net Profit NPM
    (Rs 000) FY97 FY99 FY97 FY99 FY97 FY99 FY99
    ACC 109 147 1,669 2,146 52 45 2.1%
    Guj Ambuja 127 143 4,506 5,260 631 613 11.7%
    Madras Cements 116 133 2,458 2,729 470 218 7.8%

    The price to earnings ratio (P/e) reflects the valuations accorded to the company by the stock markets. The better the business, the higher the valuations (of course, sentiments also play a major role). And on this parameter, Gujarat Ambuja once again tops the list – after all it’s one of the most efficient cement companies in Asia. ACC is loss making and hence there is no relevant P/e for the company.

      Stock Performance
      Price P/e
    ACC 145 -
    Guj Ambuja 209 15.7
    Madras Cements 4,007 11.9

    The cement sector is witnessing buoyant times. However as competition picks up in coming years, margins could come under pressure. In such a scenario companies like Gujarat Ambuja will be able to post better returns as compared to their competitors.

     

     

    Equitymaster requests your view! Post a comment on "Cement – The leaders and laggards". Click here!

      
     

    More Views on News

    UltraTech: Post-Acquisition Cement Capacity Augmented to 93 MTPA (Quarterly Results Update - Detailed)

    Aug 11, 2017

    UltraTech Cement completed the acquisition of cement plants of Jaiprakash Associates Limited (JAL) and Jaypee Cement Corporation Limited (JCCL) during the quarter ended June 2017.

    Ambuja Cement: Fall in Other Income Drag Bottomline Lower (Quarterly Results Update - Detailed)

    Aug 11, 2017

    While topline witnessed growth on the back of higher cement sale volumes, a 50.5% YoY fall in other income weighed on Ambuja's bottomline during the quarter ending June 2017.

    ACC: Cementing Growth through Capacity Expansion and Favorable Sectoral Developments (Quarterly Results Update - Detailed)

    Jul 20, 2017

    Expanded capacity helped ACC strengthen its market presence in eastern region during the quarter ended June 2017.

    UltraTech: One of the Weakest Quarters in Years (Quarterly Results Update - Detailed)

    May 18, 2017

    Cement demand was weak because of subdued housing demand, volatile cement prices, and rising fuel costs.

    Ambuja Cem: Net Profits zoom up 361% YoY During Jan-March Quarter (Quarterly Results Update - Detailed)

    May 8, 2017

    Stock price jumps up on Ambuja-ACC merger talks...

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working(Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Think Twice Before You Keep Money In A Savings Bank Account(Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    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: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    COMPARE COMPANY

    MARKET STATS