- Home
- About
- Team
- Today's Market
- Premium
- Research it
- Outlook
- Portfolio
- Mobile
- Trust Equitymaster
- Help
- Free Reports
MEMBER'S LOGINX
| Login Failure | ||||||||
|
||||||||
| Sign Up | Forgot Password? | ||||||||
- Home
- Outlook Arena
- Aug 2, 2010 - India Cements: Logistic costs play spoilsport
India Cements: Logistic costs play spoilsport
Aug 2, 2010
India Cements announced its 1QFY11 results recently. Both top line and bottom line registered a de-growth of 8% YoY and 83% YoY respectively. Here is our analysis of results.
Performance summary
- Top line declines 8% YoY in 1QFY11.
- Operating margins fall drastically to 11.6% in 1Q FY11 due to increase in transportation and handling cost as a percentage of sales. Transportation cost (as a percentage of sales) increased from 14% in 1QFY10 to 21% in 1QFY11.
- Dismal performance at the operating level dragged the bottom line as well. Net profits declined 83% YoY in 1QFY11.
| (Rs m) | 1QFY10 | 1QFY11 | Change |
| Sales | 9,535 | 8,807 | -7.6% |
| Other operating income | 68 | 21 | -69.0% |
| Total Income | 9,603 | 8,828 | -8.1% |
| Expenditure | 6,671 | 7,806 | 17.0% |
| Operating profit (EBDITA) | 2,931 | 1,022 | -65.1% |
| Operating profit margin (%) | 30.5% | 11.6% | |
| Other income | - | 264 | |
| Interest | 385 | 298 | -22.7% |
| Depreciation | 571 | 599 | 4.9% |
| Profit before tax | 1,976 | 389 | -80.3% |
| Exceptional items | 210 | (116) | |
| Tax | 743 | 24 | -96.8% |
| Profit after tax/(loss) | 1,443 | 249.8 | -82.7% |
| Net profit margin (%) | 15.0% | 2.8% | |
| No. of shares (m) | 307.2 | ||
| Diluted earnings per share (Rs) | 0.8 | ||
| P/E ratio (x) * | 14.1 |
What has driven performance in 1QFY11?
- Topline declined 8% YoY during the quarter despite increase in clinker and cement volumes during the quarter. Drop in realizations due to excess capacity more than offset the volume growth thereby impacting the topline during the quarter. Management does not anticipate the pricing scenario to improve in the near term. Hence prices are likely to remain soft in Southern India. However, in the view of significant additional capacity coming on stream, the company plans to increase its exposure to other states in Southern India namely Tamil Nadu and Karnataka.
- Operating profits declined 65% YoY due to increase in overall expenditure. The operational cost of the company went up on the account of increase in power & fuel and transportation cost. Power & fuel cost (as a percentage of sales) increased from 25% in 1QFY10 to 31% during the quarter due to increase in coal prices, a key raw material input. Transportation cost (as a percentage of sales) increased from 14% in 1QFY10 to 21% in 1QFY11 due to shortage in availability of wagons. This impacted operating margins for the quarter.
- Net profits declined 83% YoY to Rs 250 m. Net margins fell substantially from 15% in 1QFY10 to 2.8% in 1QFY11 due to dismal performance at the operating level coupled with an increase in depreciation expenses.
What to expect?
Cement prices in southern India are likely to remain sluggish due to over capacity. The situation is unlikely to improve in the near term. In view of over capacity, cement players are looking to export the produce to north eastern states where prices are higher. However, this is likely to impact margins (visible in this quarter) as freight expenses would rise.At the current price of Rs 103, the stock is trading at 14 its trailing twelve month earnings. The stock as such looks attractively priced. However, concerns do prevail. The rising costs coupled with expected softening of realizations will arrest growth in the medium term.
|
| |
INDIA CEMENTS SHARE PRICE
Nov 16, 2018 (Close)
TRACK INDIA CEMENTS
- Track your investment in INDIA CEMENTS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
- Add To MyStocks
MORE ON INDIA CEMENTS
INDIA CEMENTS 5-YR ANALYSIS
COMPARE INDIA CEMENTS WITH
OTHER USEFUL LINKS
MARKET STATS
ABOUT EQUITYMASTER
Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.
FREE NEWSLETTERS
PREMIUM PRODUCTS
QUICK LINKS
APPS
FOLLOW
Copyright © Equitymaster Agora Research Private Limited.
Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap
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
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, Canada or the European Union countries, 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.