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How did cement majors perform in 1QFY15? - Views on News from Equitymaster
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How did cement majors perform in 1QFY15?
Aug 2, 2014

The June quarter result season is underway. Major cement players such as ACC, Ambuja Cements and UltraTech Cement have announced their result for the quarter. How did the three cement biggies perform during the quarter? Let us find out... During the quarter ended June 2014, the three major cement players reported positive topline growth, though Ambuja reported the highest growth in volumes and realisations.

Net sales
  ACC Ambuja UltraTech
Net Sales (Rs m) 30,090 27,064 59,886
Change (YoY) 7.8% 15.5% 13.6%

ACC reported 7.8% YoY growth in net sales driven by 3.8% YoY increase in cement sales volume. Ambuja, on the other hand, saw its topline grow by 15.5% YoY with cement sales volume increasing by 7.6% YoY. UltraTech reported topline growth of 13.6% YoY with combined domestic cement and clinker volume sales growing at a higher rate of 16.1% YoY. It must be noted, however, that 1QFY15 figures of UltraTech are not strictly comparable with the previous year's figures since the current quarter figures also include those of the Gujarat units of Jaypee Cement Corporation Limited from 12th June, 2014.

Operating profit margin
  ACC Ambuja UltraTech
EBITDA margin 13.3% 21.2% 17.3%
Change (YoY) -2.2% 0.3% -3.4%

On the profitability front, ACC and UltraTech Cement saw their operating profit margins decline by 2.2 percentage points and 3.4 percentage points YoY respectively. Ambuja, however, managed to marginally expand its operating profit margin by 0.3 percentage points YoY. As you can see in the below table, Ambuja continues to lead the pack as one of the most efficient and profitable cement players.

Finance cost
  ACC Ambuja UltraTech
Interest expenses (Rs m) 111 203 1,098
Change (YoY) -37.8% 18.6% 44.1%

On the non-operating front, we see that ACC and Ambuja have very meager finance costs given that the companies have almost negligible debt. UltraTech, on the other hand, does pay relatively higher interest expenses.

Net profit margin
  ACC Ambuja UltraTech
PAT margin 8.0% 15.1% 10.5%
Change (YoY) -1.3% 1.3% -2.2%

At the bottomline level, both ACC and UltraTech Cement saw their profit margins declined by 130 basis points and 220 basis points respectively YoY. Ambuja bucked the trend and reported a positive change in net profit margin by 130 basis points YoY. The topline performance of the three major players reflects a modest recovery in cement demand. A full-fledged recovery in cement demand seems still some time away. The new business-friendly government's thrust on housing and infrastructure development should augur well for cement demand in the coming times. Profitability, however, may be concern as inflationary pressures have hardly shown any signs of abating. As Ambuja has shown, cost efficiencies will be a key performance driver for cement stocks.

Ankit Shah

Ankit Shah (Research Analyst) is the editor for Equitymaster Insider and Vivek Kaul's Inner Circle. A journalism graduate turned Research Analyst, Ankit joined Equitymaster when he was just 23 years old, right after getting his MBA from NMIMS, Mumbai. Having been an avid reader of Equitymaster's research through his college years, Ankit knew he would fit right in!

In his seven years with Equitymsater, Ankit rose quickly, leaving his mark on almost everything from: Travelling thousands of miles to find the next small cap stock, as part of the Hidden Treasure team... Designing Equitymaster's Secrets, an online value investing course based on the company's 20-year journey... Bringing global investing ideas to Indian readers through Vivek Kaul's Inner Circle... Right to launching his brand-new service, Equitymaster Insider.

Ankit is a firm believer in Charlie Munger's multidisciplinary approach on juggling between various disciplines...He is not just a research analyst, but also a voracious reader and an avid traveler...Born and brought up in Mumbai, he now prefers to keep away from the noisy megapolis as much as possible. In any given month, you could find him exploring the ancient ruins of South America, the beaches of South East Asia, or the organic cafes of Pondicherry.

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3 Responses to "How did cement majors perform in 1QFY15?"


Dec 27, 2014

Nice article with good insides..



Sep 13, 2014

Thank you for pointing out this to us. We have rectified the same.

Like (1)

Harit Shah

Sep 12, 2014

Looks like you need to hire a new editor! Please look at the title of this article...

Like (1)
Equitymaster requests your view! Post a comment on "How did cement majors perform in 1QFY15?". Click here!

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