X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
India Cements: Red everywhere - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Dec 2, 2002

    India Cements: Red everywhere

    India Cements, the largest cement producer in the Southern region, has reported huge losses in 1HFY03. On a YoY basis, the company has reported a 23% decline in its topline while net losses have almost quadrupled in 1HFY03. The results for 2QFY03 is even worser, but what is more disturbing is that the company has shown losses at the operating level itself. The operating margin of the company stood at -5% in 2QYF03.

    (Rs m) 2QFY02 2QFY03 Change 1HFY02 1HFY03 Change
    Net Sales 2,643 1,992 -24.6% 5,777 4,471 -22.6%
    Other Income 25 27 8.0% 33 35 5.2%
    Expenditure 2,242 2,098 -6.4% 4,493 4,345 -3.3%
    Operating Profit (EBDIT) 401 (106) - 1,283 126 -90.2%
    Operating Profit Margin (%) 15.2% -5.3%   22.2% 2.8%  
    Interest 537 580 8.0% 1,109 1,156 4.2%
    Depreciation 198 205 3.5% 400 407 1.9%
    Profit before Tax -309 -864 - -193 -1,402 -
    Tax - - - - 492 -
    Profit after Tax/(Loss) (309) (864) - (193) (911) -
    No. of Shares (m) 140.0 140.0   140 140  
    Diluted Earnings per share* -8.8 -24.7   -2.8 -13.0  
    (* annualised)            

    The fall in topline can be mainly attributed to a drastic fall in cement relisations. While volumes may have been good on account of robust housing and infrastructure demand, realisations have plummeted in this region due to oversupply condition. In FY02, both ACC and Gujarat Ambuja have set up huge capacities in the Southern and Western region respectively. This has led to a glut of cement supply in this region, as the cement output of Gujarat Ambuja's Chandrapur plant may be finding its way in to the southern markets.

    What is even more surprising is the fact that Madras Cements, another major player in the South Indian market, has reported better results for the 2QFY03. While Madras Cements reported a 14% fall in topline it is much better on a comparative basis to India Cements. This may be in part explained by the fact that India Cements operates mainly in Tamilnadu and Kerala, where realisations have been significantly lower. The focused presence means that the company has failed to capitalise on the robust growth in cement volumes.

    Despite the low interest rate regime, the company has not been able to reduce its interest liabilities. India Cements had borrowed excessively in order to increase its capacity by way of inorganic expansion in the past. As a measure to reduce its high debt obligations, the company has resorted to distress sale of its cement plants. India Cements has already sold its subsidiary, Shri Vishnu Cement, for a sum of Rs 3.9 bn in FY02 to Zuari Cement. It has already floated plans to sell its other cement subsidiaries viz. Visaka Cement and Raasi Cement. As a precautionary measure, the company has proposed a debt restructuring plan to its lenders.

    The stock is currently trading at Rs 19. The markets have already punished the stock due to its poor performance in the last quarter (down 50% from Rs 33 since the beginning of this financial year). In the short term, the topline of the company is likely to face increasing pressure due to competition from ACC and Gujarat Ambuja, who have set up new capacities to cater to the Southern markets. On the realisations front, due to its regional presence, the bargaining power is lower and as a result realisation growth seems unlikely. In the long term, the company's performance will depend heavily on whether it is able to develop new markets in other regions of the country. Until then, one will not be surprised if the stock price languishes at the current levels.

     

     

    Equitymaster requests your view! Post a comment on "India Cements: Red everywhere". Click here!

      
     

    More Views on News

    UltraTech: Post-Acquisition Cement Capacity Augmented to 93 MTPA (Quarterly Results Update - Detailed)

    Aug 11, 2017

    UltraTech Cement completed the acquisition of cement plants of Jaiprakash Associates Limited (JAL) and Jaypee Cement Corporation Limited (JCCL) during the quarter ended June 2017.

    Ambuja Cement: Fall in Other Income Drag Bottomline Lower (Quarterly Results Update - Detailed)

    Aug 11, 2017

    While topline witnessed growth on the back of higher cement sale volumes, a 50.5% YoY fall in other income weighed on Ambuja's bottomline during the quarter ending June 2017.

    ACC: Cementing Growth through Capacity Expansion and Favorable Sectoral Developments (Quarterly Results Update - Detailed)

    Jul 20, 2017

    Expanded capacity helped ACC strengthen its market presence in eastern region during the quarter ended June 2017.

    UltraTech: One of the Weakest Quarters in Years (Quarterly Results Update - Detailed)

    May 18, 2017

    Cement demand was weak because of subdued housing demand, volatile cement prices, and rising fuel costs.

    Ambuja Cem: Net Profits zoom up 361% YoY During Jan-March Quarter (Quarterly Results Update - Detailed)

    May 8, 2017

    Stock price jumps up on Ambuja-ACC merger talks...

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    INDIA CEMENTS SHARE PRICE


    Aug 18, 2017 (Close)

    TRACK INDIA CEMENTS

    • Track your investment in INDIA CEMENTS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    INDIA CEMENTS 5-YR ANALYSIS

    Detailed Financial Information With Charts

    COMPARE INDIA CEMENTS WITH

    MARKET STATS