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Gujarat Ambuja posts 50% drop in net

Oct 13, 2000

Gujarat Ambuja Cements (GACM) has posted a sharp 50% decline in profits during the quarter ended 30th June 2000. The company has been adversely affected by a sharp fall in cement prices. Volumes however rose 8.3% to 2 million tonnes.

(Rs m) 1QFY00 1QFY01 Change
Net Sales 2,809.5 2,902.6 3.3%
Profit after Tax/(Loss) 500.5 250.6 -49.9%
Net profit margin (%) 17.8% 8.6%  
No. of Shares (eoy) 147.2 147.2  
Diluted Earnings per share* 13.6 6.8  
*(annualised)

Among the factors that contributed to the decline cement realisations were the drought in the west and later the floods in the eastern regions. Apart from this competition continued to remain intense with companies vying for market share. GACM, which is one of the most efficient cement companies globally has not been able to protect its margins in this environment.

We had estimated the company to post a topline and bottomline growth of 18% during the year. However, pending the announcement of a more detailed note on the performance of the company, in view of the worse than expected performance we may need to revise downwards our full year estimates.

The stock presently trades at 20x 1QFY01 annualised earnings.


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