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: Promising performance - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jul 31, 2003

    Madras Cements: Promising performance

    Madras Cements, one of the most efficient cement producers in the country has announced a strong performance in the June quarter. The company has reported a 14% topline growth which has led to an even stronger 87% rise in bottomline for the June quarter on a YoY basis. While there has been no significant improvement in operating margins, reduction in interest expenses has contributed positively to the bottomline improvement.

    (Rs m) 1QFY03 1QFY04 Change
    Net Sales 1,617 1,839 13.7%
    Other Income 5 7 49%
    Expenditure 1,195 1,356 13.4%
    Operating Profit (EBDIT) 422 483 14.5%
    Operating Profit Margin (%) 26.1% 26.3%  
    Interest 178 160 -10.1%
    Depreciation 162 171 5.3%
    Profit before Tax 87 159 84.3%
    Tax 32 57 79.6%
    Profit after Tax/(Loss) 55 102 87.0%
    Net profit margin (%) 3.4% 5.6%  
    No. of Shares 1.2 1.2  
    Diluted Earnings per share* (Rs) 181.1 338.7  
    P/E Ratio (x)   16.7  
    (* annualised)      

    The company has indicated that its volumes for the June quarter have risen by 5%. This indicates that realisations have actually shown an improvement in the southern states. While the management has indicated that cement prices in its key market (Tamilnadu) have shown a marginal decline compared to same period last year, prices in other states like Kerala, Karnataka and Andhra Pradesh have actually improved. For FY04 we have assumed a volume growth of 9% and a realisations growth of 5% for Madras Cement in our projections. As the demand supply mismatch is slowly clearing up, we believe that cement prices are likely to improve from here on.

    The operating profits of the company have improved by nearly 15%. Operating margins on the other hand, have remained more or less stable. Higher volumes have led to higher expenses and consequently there has not been a significant improvement in operating margins. However, going forward with improvement seen in realisations and continuing cost cutting measures we are likely to see further improvement in the company's operating margins. For our FY04 estimates, we have arrived at an operating margin of 25.7% for the company (23.8% in FY03).

    While operating margins have held ground, savings in interest cost has resulted in improved profitability for Madras Cements' in the June quarter. The company has pared interest costs by 10% in 1QFY04. Since average interest cost of the company stood at 9.2% in FY03, we believe that there is room for further reduction in interest expenses and consequently improvement in bottomline performance for FY04.

    At Rs 5,661, the stock is trading at a P/E of 16.7x its annualised 1QFY04 earnings. The Madras Cements stock has risen significantly in the recent past, 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. As the worst seems to have passed for the company as far as realisations are concerned, investors could look forward to a better performance from the company going forward.



    Equitymaster requests your view! Post a comment on "Madras Cements: Promising performance". 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