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Ambuja Cement: Fall in Other Income Drag Bottomline Lower - Views on News from Equitymaster
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  • Aug 11, 2017 - Ambuja Cement: Fall in Other Income Drag Bottomline Lower

Ambuja Cement: Fall in Other Income Drag Bottomline Lower
Aug 11, 2017

Ambuja Cement has announced its results for the second quarter of the calendar year 2017. During the quarter ended June 2017, while the company's topline grew by 11.9% YoY, net profits declined by 13.2% YoY. Here is our analysis of the results:

Performance summary
  • On a standalone basis, net sales during the quarter reported double-digit growth of 11.9% YoY.
  • The growth in the topline was contributed by both increased volumes and realisations. Cement sales volumes increased 5% YoY from 5.76 million tonnes in 2QCY16 to 6.05 million tonnes in 2QCY17. Cement realisation also witnessed a similar improvement and increased 5.7% YoY.
  • Operating profit was higher by 6% YoY. However, the operating profit margin declined from 20.1% in 2QCY16 to 19.0% in 2QCY17. This was due to higher material costs and power & fuel expenses.
  • Other income (inclusive of other operating income) reported a drop of 50.5% YoY.
  • Finance costs stood at Rs 165 million during the quarter, thereby reporting a decline of 22.1% YoY.
  • Depreciation charges declined by 4.5% YoY.
  • Tax expenses were higher by 7.0% YoY during the quarter.
  • Despite a decent operating performance, the sharp dip in other income dragged net profits lower by 13.2% YoY. Net profit margin decreased from 15.7% in 2QCY16 to 12.2% in 2QCY17.

    Standalone Financial Performance Snapshot
    (Rs m) 2QCY16 2QCY17 Change 1HCY16 1HCY17 Change
    Net sales 28,806 32,223 11.9% 56,261 61,156 8.7%
    Expenditure 23,024 26,092 13.3% 50,121 51,375 2.5%
    Operating profit (EBITDA) 5,782 6,131 6.0% 6,139 9,781 59.3%
    EBITDA margin 20.1% 19.0%   10.9% 16.0%  
    Other income 1900 940 -50.5% 3413 2,249 -34.1%
    Depreciation 1,507 1,439 -4.5% 1,439 2,899 101.5%
    Finance costs 212 165 -22.1% 400 542  
    Profit before tax & exceptional items 5,963 5,466 -8.3% 7,714 8,590 11.4%
    Exceptional gain/ (loss) 0 0   0 0  
    Profit before tax 5,963 5,466 -8.3% 7,714 8,590 11.4%
    Tax 1,444 1,544 7.0% 2,659 2,202 -17.2%
    Effective tax rate 24.2% 28.2%   34.5% 25.6%  
    Profit after tax 4,519 3,922 -13.2% 5,054 6,388 26.4%
    PAT margin 15.7% 12.2%   9.0% 10.4%  
    No of shares (m)         1,985.6  
    Diluted EPS (Rs)*         5.6  
    P/E (times)         47.2  

    *trailing twelve months earnings

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