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.
Madras Cements: March quarter surprise - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jun 23, 2003

    Madras Cements: March quarter surprise

    Madras Cements, one of the largest cement producers in the southern region has reported encouraging March quarter results. It has reported a 76% jump in its bottomline on the back of a 5% rise in topline during the quarter. However, the cement major has reported a 52% drop in its bottomline for FY03 on the back of a 11% drop in its topline. Due to the better performance of the company in the December and March quarters, the full year financial performance has been salvaged to an extent.

    (Rs m) 4QFY02 4QFY03 Change FY02 FY03 Change
    Net Sales 1,603 1,686 5.2% 7,063 6,261 -11.3%
    Other Income 8 4 -47% 31 42 37%
    Expenditure 1,191 1,243 4.3% 5,291 4,769 -9.9%
    Operating Profit (EBDIT) 411 443 7.6% 1,773 1,493 -15.8%
    Operating Profit Margin (%) 25.7% 26.3%   25.1% 23.8%  
    Interest 181 166 -8.2% 775 662 -14.6%
    Depreciation 148 159 7.6% 610 640 5.0%
    Profit before Tax 90 121 34.7% 419 233 -44.3%
    Extraordinary items - -   - -  
    Tax 32 19   150 104  
    Profit after Tax/(Loss) 58 103 75.8% 269 130 -51.7%
    Net profit margin (%) 3.6% 6.1%   3.8% 2.1%  
    No. of Shares 1.2 1.2   1.2 1.2  
    Diluted Earnings per share* (Rs) 48.3 84.9   222.5 107.3  
    P/E Ratio (x)         46.6  
    (* annualised)            

    Topline performance of the company has been rather dismal in FY03. This can be attributed to the strong fall in realisations in the same period. While volumes have grown (10%) marginally above the industry average, realisations have plummeted by close to 22%. However, we would like to point out that in the last two quarters of FY03, the company has seen an improvement in realisations. The improvement in realisations in the December and March quarters may be on account of absorption of the existing overcapacity in the market, led by strong demand. Demand was further strengthened in the March and December quarters as the highway projects work shifted to the southern region.

    While our estimates for FY03 factored in a higher fall in topline for FY03, our operating margin estimates were more or less in line with that reported by the company. We believe that the margin improvement seen in the company's performance in FY03 is sustainable going forward due to better pricing scenario in the southern region. Also, going forward, the growth momentum is likely to be maintained due to strong demand from the housing as well as the infrastructure sectors. Apart from improvement in cement realisations, better operating efficiencies helped the company shore up its bottomline performance in 3QFY03 and 4QFY03.

    Apart from cost control at the operating level, Madras Cements has also considerably reduced its interest expenses. In FY03 interest expenses have fallen by 15%. Profitability is expected to improve further due to better operating efficiencies and falling interest expenses.

    At Rs 4,995, the stock is trading at a P/E ratio of 46.6x its FY03 earnings. The Madras Cements stock has risen significantly in the last one month, seemingly on account of improvement in investor perception due to improving demand and realisations scenario. Cement demand has improved in the southern region mainly due to good demand from the highway projects. Prices too have shown a good degree of improvement in the March quarter. Having said that, we must also point out that the supply overhang still exists in the southern region, thus any improvement in cement prices from current levels, may be slow to materialise. The worst however seems to have passed for the company as far as realisations are concerned.



    Equitymaster requests your view! Post a comment on "Madras Cements: March quarter surprise". 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

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    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


    Aug 18, 2017 (Close)


    • Track your investment in THE RAMCO CEMENTS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks



    Detailed Financial Information With Charts