Associated Cement Companies (ACC) has reported net sales of Rs 7 bn (up 13.7% YoY) and a net profit of Rs 702 mn (down 17.2% YoY) for the quarter ended 30th June 1999. The company has reported a 17% jump in cement volume sales to 2.7 mn tons.
ACC, India's second largest cement producer, has an aggregate cement capacity of 11.3 mn tpa.
The net profit margin and the operating profit margin have registered declines at 10% (13.7%) and 10.8% (11.7%) respectively.
Despite the pick up in sales volume, the company has been unable to even maintain its bottomline, which registered a decline of 17%. The company has attributed this to the 6% decline in net price realisation over the period under consideration.
The demand for cement has been picking up since the last quarter of FY99 and this has helped increase price realisations. Despite this prices still continue to languish below the first quarter FY99 prices.
The other factors that have contributed to the decline in profits are the 6% and 10% rise in interest and depreciation costs respectively. The company's press release has stated that the cost per ton declined by Rs 42 over the period.
With economic growth picking up, the demand for cement too is likely to register strong growth. This will help the top line growth of the cement companies, while the bottomline growth will continue to be determined by the cost factors and the existing competition in the marketplace.
The stock has been rated as a 'BUY' on account of the strong recovery in demand and consequently the prices of cement. Moreover, the company's initiatives in controlling costs and increasing efficiency is expected to drive earnings growth.
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: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407