Madras Cements posts 8% drop in net - Views on News from Equitymaster

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Madras Cements posts 8% drop in net

Oct 24, 2000

Madras Cements Limited has posted a 16% growth in sales for the quarter ended 30th September. Despite this there has been a drop in profits. This can be attributed to the sharp decline in operating profit margins.

(Rs m) 2QFY00 2QFY01 Change
Net Sales 1,356 1,570 15.7%
Other Income 7 4 -49.3%
Expenditure 821 1,032 25.6%
Operating Profit (EBDIT) 535 538 0.5%
Operating Profit Margin (%) 39.4% 34.3%  
Interest 154 160 4.0%
Depreciation 115 128 12.0%
Profit before Tax 274 253 -7.5%
Other Adjustments - -  
Tax - -  
Profit after Tax/(Loss) 274 253 -7.5%
Net profit margin (%) 20.2% 16.1%  
No. of Shares (eoy) 1.2 1.2  
Diluted Earnings per share* 904.8 836.7  
P/e (x) 4.1 4.4  
*(annualised)      

We have projected a 16% growth in revenues for the full year, which is in line. However, on the profit front, we have estimated a 45% growth. As against this the profits in the first half of the year have been lower by 28% YoY. In view of this we may need to tone down our profit forecasts. The impact of the floods seems to have been underestimated.

The stock is presently trading at Rs 3,700, implying a P/e multiple of 4.4 on an annualised basis.


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