Madras Cements: Sales, profits rocket - Views on News from Equitymaster

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Madras Cements: Sales, profits rocket

Aug 2, 2001

Madras Cements has posted a 45% increase in topline during the quarter ended 30th June 2001. The company’s profits more than quadrupled on the back on better realisation and higher volumes. Growth in volumes was fuelled by the commissioning of the company's new 1 million tonne plant.

(Rs m) 1QFY01 1QFY02 Change
Net Sales 1,443 2,091 44.9%
Other Income 7 0 -95.9%
Expenditure 1,129 1,399 23.9%
Operating Profit (EBDIT) 314 692 120.6%
Operating Profit Margin (%) 21.7% 33.1%  
Interest 137 212 54.3%
Depreciation 128 179 39.0%
Profit before Tax 55 302 446.6%
Other Adjustments - -  
Tax 11 50 367.3%
Profit after Tax/(Loss) 45 252 465.6%
Net profit margin (%) 3.1% 12.0%  
No. of Shares (eoy) 1.2 1.2  
Diluted Earnings per share* 147.5 834.1 465.6%
*(annualised)      

Production was up 16.7% during the quarter, while dispatches grew at a slower 12.5%, implying that realisations grew in excess of 30% (YoY). This sharp jump is largely due to the fact that last year the cement market was witnessing a scenario where both realisations and demand were declining. This situation was reversed only in December 2001, when companies formed a cartel to limit production to jack up prices. Indeed, this strategy has met with considerable success, and this is apparent from the company's significant improvement in financial performance.

During the quarter, both interest and depreciation were higher as the company’s new 1 million tonne plant went on stream. Tax provisioning to increased significantly even as other income declined. The rise in OPM, however, more than made up for these factors, resulting in the sharp improvement in profitability.

Madras Cements currently trades at Rs 4,471, implying a price to earnings ratio of 5.4x on annualised earnings.


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