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ACC: A sharp turnaround

Oct 31, 2001

Associated Cement Companies (ACC) has once again reported an impressive quarterly result. The company is back in the black with a net profit of Rs 170 m on the back of a 6.3% rise in sales and a sharp rise in operating margins.

(Rs m)2QFY012QFY02Change
Sales 5,866 6,238 6.3%
Other Income 244 353 44.8%
Expenditure 5,286 5,333 0.9%
Operating Profit (EBDIT) 580 905 56.0%
Operating Profit Margin (%)9.9%14.5%
Interest 424 350 -17.3%
Depreciation 355 352 -0.9%
Profit before Tax 45 555
Extraordinary item (200) (250)25.0%
Tax - 135
Profit after Tax/(Loss) (155) 170
Net profit margin (%)-2.6%2.7%
No. of Shares (eoy) (m) 170.9 170.9
Diluted number of shares 170.9 170.9
Earnings per share (Rs)* (3.6) 4.0
(*annualised)

The company has sold 2.6 Million Tonnes (MT) of cement in the quarter ended September 30, 2001 as compared to 2.5 MT in the corresponding quarter of the previous year, a growth of 4%. Favorable cement prices thanks to the cartelisation effect has resulted in higher value growth for the company in the second quarter also. The company's thrust on improving efficiency seems to have paid-off and is vindicated by the sharp rise in operating margins in the aforesaid quarter. Margins have gone up from 9.9% in 2QFY01 to 14.5% in 2QFY02. Lower interest and depreciation costs have also resulted in a sharp jump in profits at the pre-tax levels.

Due to write-off of dimunition in the value of assets and other adjustments, profits at the net level have come down. The scrip is currently trading at Rs 132 on a P/E multiple of 33.2x annualised 2QFY02 earnings.

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