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Guj Ambuja: Interest exp. takes toll

Jul 31, 2001

Gujarat Ambuja has posted an over 6% growth (excluding the impact of extraordinary items) in profits for the year ended 30th June 2001. The company's profitability has been suppressed by a 35% jump in interest expenditure and the provisioning of Rs 140 m for taxation (previous year nil).

(Rs m) (Year ended 30 th June) 4QFY01 4QFY02 Change FY01 FY02 Change
Net Sales 3,060 3,780 23.5% 11,170 12,690 13.6%
Operating Profit (EBDIT) 830 1,390 67.5% 3,970 4,630 16.6%
Operating Profit Margin (%) 27.1% 36.8%   35.5% 36.5%  
Interest 320 310 -3.1% 990 1,340 35.4%
Depreciation 310 310 0.0% 1,230 1,290 4.9%
Profit before Tax 200 770 285.0% 1,750 2,000 14.3%
Other Adjustments 320 -   2,530 -  
Tax - -   - 140  
Profit after Tax/(Loss) 520 770 48.1% 4,280 1,860 -56.5%
Net profit margin (%) 6.5% 20.4%   15.7% 14.7%  
No. of Shares (eoy) 147.2 147.2   147.2 147.2  
Diluted Earnings per share* 14.1 20.9   29.1 12.6  
*(annualised)            

Cement volumes for the year improved 4% to 6.05 million tonnes, implying that average cement realisations for the year were higher by over 9%. In the fourth quarter, the company earned a PAT of Rs 770 m, which is over 40% of full year earnings.

Over the last couple of years, the company has undertaken heavy capital expenditure. Indeed, the company's capacity is expected to touch 9 million tonnes at the end of calendar year 2001 as against just 5 million at the end of FY99. Apart from this, Ambuja has made investments in several companies including ACC. The result of this expansion cum acquisition spree has been a sharp rise in debt, which has resulted in a 35% jump in interest burden.

Ambuja continues to perform well on the efficiency front. Indeed margins improved by 100 basis points, as projected by us. However, our profit projections were marginally higher on account of an expected higher rate of growth in sales.

Gujarat Ambuja currently trades at Rs 181, implying a price to earnings ratio of 14.3x on full year earnings.


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