Gujarat Ambuja: Pulling through another bad year - Views on News from Equitymaster

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Gujarat Ambuja: Pulling through another bad year

Aug 9, 2000

Gujarat Ambuja Cements Limited has posted a rise of 16% in net profits (before extra ordinary income) for the year ending 30th June 2000. The company has been successful in limiting the decline in operating margins (inclusive of other income) in a year which has been termed as "one of the most difficult years" for the sector.

(Rs m) FY99 FY00 Change
Net Sales 10,580 11,170 5.6%
Operating Profit (EBDIT) 3,820 3,980 4.2%
Operating Profit Margin (%) 36.1% 35.6%  
Interest 1,080 990 -8.3%
Depreciation 1,230 1,240 0.8%
Profit before Tax 1,510 1,750 15.9%
Other Adjustments (Net) 0 2,530  
Tax - -  
Profit after Tax/(Loss) 1,510 4,280 183.4%
Net profit margin (%) 14.3% 15.7%  
No. of Shares (eoy) (m) 73.6 147.2  
Diluted number of shares 147.2 147.2  
Diluted Earnings per share 10.3 29.1  

The rise in net sales comes despite volumes growing by only 1.2% during the year. We had estimated the company’s full year earnings at Rs 4.9 bn, higher than actual numbers. This was largely due to the variance in gross margins. We under estimated the fall out of the drought on the company's realisations.

The stock currently trades at Rs 208, implying a P/e multiple of 7.2x. However, on ignoring the influence of other income on the bottomline the P/e stands increased to 12x.


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