JK Lakshmi Cement Posts Strong Result For June Quarter 2012
DSIJ Intelligence / 31 Jul 2012
JK Lakshmi Cement, a north-based cement manufacturing company, has announced the result for the June quarter 2012. The net sales of the company grew by 34% on YoY basis to Rs 534 crore and net profit has jumped by 109.3% on YoY basis to Rs 50.28 crore.
JK Lakshmi Cement, a north-based cement manufacturing company, has announced the result for the June quarter 2012. The net sales of the company grew by 34% on YoY basis to Rs 534 crore and net profit has jumped by 109.3% on YoY basis to Rs 50.28 crore. This was on account of the jump in the sales volume and increase in the realisation during the quarter. The sales volume of the company has increase by 23% on YoY basis and on 2.4% on QoQ basis mainly on the back of the delayed monsoon, and low base effect in the same period last year. Also the company recently commissioned its cement grinding unit in Haryana which helped to achieve higher sales volume.
| Sales Volume and realisation during the June Quarter 2012 | |||||
|---|---|---|---|---|---|
| Particulars | Jun-12 | Jun-11 | YoY | Q4 FY12 | QoQ |
| Net Sales (Rs Cr.) | 534.09 | 397.11 | 34.5 | 526.73 | 1.4 |
| Dispatches (Mn Tonnes) | 1.45 | 1.18 | 23 | 1.416 | 2.4 |
| Realisation/Tonne | 3683.4 | 3365.3 | 9 | 3719.8 | -1.0 |
Cement companies generally go for a price cut in the June quarter. However, due to high freight charges (up by 21% YoY) and high raw material cost (up by 53% YoY), Jk Lakshmi cement retained the high cement prices. In fact, it also raised by Rs 10-12 on per 50 kg bag in the month of May 2012. This resulted into higher realisation during the quarter which improved by 9% on YOY basis to Rs 3683/ tonne.
The company has reported strong bottomline growth both on yearly and sequential basis. In its previous quarter the retrospective change in the depreciation method for its captive power plant impacted the bottomline of the company. This was a onetime aberration figure and was shown a exceptional item (Rs 39.24 crore).
The operating profit of the company strongly grew by 54% on YoY basis to Rs 122.45 crore and EBITDA margin improved by 300 bps on YoY to 22.92%. Despite a jump in the raw material (up by 53%) and freight charges (up by 21%) The improvement in the operating profit and margin was on the back of increase in the realisation due and fall in inventory which declined by 90% on YoY basis to Rs 0.95 crore. All these above factors have helped the company to report robust numbers during the quarter. The company in its press release has stated that it has achieved all round improvement in its capacity utilization and efficiency parameters.
| Financial Perforamance June Quarter 2012 | |||||
|---|---|---|---|---|---|
| Particulars | Jun ' 12 | Jun ' 11 | YoY | Mar ' 12 | QoQ |
| Sales | 534.09 | 397.11 | 34.5 | 526.73 | 1.4 |
| Raw Material | 83.74 | 54.54 | 53.5 | 78.95 | 6.1 |
| Power And Fuel | 116.48 | 108.32 | 7.5 | 99.83 | 16.7 |
| Operating Profit | 122.45 | 79.13 | 54.7 | 113.47 | 7.9 |
| Exceptional Item | 0 | 0 |
| -39.24 |
|
| Net Profit / Loss | 50.28 | 22.75 | 121.0 | 30.3 | 65.9 |
| OPM (%) | 22.92 | 19.92 | 3.0 | 21.54 | 6.4 |
| NPM (%) | 9.34 | 5.71 | 63.6 | 5.4 | 73.0 |
As per Mrs Vinita Singhania, Managing Director of the company, the increase in the company’s volume was greatly aided by the timely commissioning of its Grinding Unit in Haryana.
The cement prices also remained firm at an average price of Rs 300 per 50 kg bag in the June quarter 2012; however it came down in the April month to average Rs 280-285 per 50 kg bag across the country and then again bounced back to Rs 300 levels in the month of May. The bounced back in the cement prices is because of the delayed monsoon during the quarter.
In conclusion we believe company has reported strong numbers for June quarter 2012 on the back of strong volume growth and some hike in the cement prices during the quarter. However with the arrival of Monsoon we may see some cyclical slowdown in the demand due to slower infrastructure and construction activity. And with the slowdown in demand the prices consequently will correct by average Rs 10-15 on per 50 kg bag. However, this time the high freight cost and raw material cost will hurt the margins of the company as with slowdown in demand cement companies would not be able to pass on the hike. Therefore we expect September quarter to remain muted.
Expansion Plan
The company has recently in the April month commissioned the cement grinding unit in Haryana and is in the process of expansion of capacity through a Greenfield project of 2.7 MTPA in DURG Chhattisgarh taking the total cement capacity from current 5.3 MTPA to 8.5 MTPA by Oct 2013. For the expansion the company has envisaged the project cost at Rs 1250 crore. Of the total project cost the company will raise Rs 850 crore through debt and rest will be from internal accruals. The company has already done the financial closure for its debt requirement and as on 31st March 2012 the company has already spent 440 crore. The project is expected to schedule to go on stream by September 2013.
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