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Ambuja Cem: Heavy Monsoon, Subdued Demand Hit Sales - Views on News from Equitymaster
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  • Nov 8, 2016 - Ambuja Cem: Heavy Monsoon, Subdued Demand Hit Sales

Ambuja Cem: Heavy Monsoon, Subdued Demand Hit Sales
Nov 8, 2016

Ambuja Cements has announced its results for the third quarter of the calendar year 2016. During the quarter ended September 2016, while the company's sales growth was negative, net profit rose sharply by 80.4% YoY. Here is our analysis of the results:

Performance summary
  • On a standalone basis, net sales during the quarter reported negative growth of 4.3% YoY.
  • While cement price realisations improved by 2.8% YoY, sales volume declined by 6.6% YoY to 4.5 million tonnes during the quarter on account of heavy monsoon rains in core markets and subdued demand.
  • Operating profit was lower by 6.3% YoY on account of lower cement volume, higher diesel costs and maintenance expenses. However, lower input costs, improved fuel mix and efficiencies restricted the drop in operating profit margins.
  • Other income reported a sharp jump of 178.7% YoY. This steep increase is mainly on account of dividend income of Rs 1.03 billion from ACC Ltd, upon amalgamation of Holcim India (Private) Ltd with the company.
  • As a result, net profit shot up by 80.4% YoY. Net profit margin expanded from 7.3% in 3QCY15 to 13.8% in 3QCY16.
  • During the first nine months of the calendar year 2016, while sales remained flat, net profit grew by 13.8% YoY

    Standalone financial performance snapshot
    (Rs m) 3QCY15 3QCY16 Change 9MCY15 9MCY16 Change
    Net sales 20,952 20,043 -4.3% 70,125 69,637 -0.7%
    Expenditure 18,007 17,283 -4.0% 58,783 56,832 -3.3%
    Operating profit (EBITDA) 2,944 2,760 -6.3% 11,342 12,806 12.9%
    EBITDA margin 14.1% 13.8% 16.2% 18.4%
    Other income 898 2,503 178.7% 3446 6,082 76.5%
    Depreciation 1,553 1,595 2.7% 4,615 6,939 50.3%
    Finance costs 207 192 -7.7% 737 579 -21.5%
    Profit before tax & exceptional items 2,082 3,477 67.0% 9,436 11,370 20.5%
    Exceptional gain/ (loss) 0 0 0 0
    Profit before tax 2,082 3,477 67.0% 9,436 11,370 20.5%
    Tax 547 707 29.3% 2,460 3,428 39.4%
    Effective tax rate 26.2% 20.3% 26.1% 30.2%
    Profit after tax 1,536 2,770 80.4% 6,976 7,942 13.8%
    PAT margin 7.3% 13.8% 9.9% 11.4%
    No of shares (m) 1,551.9
    Diluted EPS (Rs)* 5.8
    P/E (times) 41.9

    *trailing twelve month earnings

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