JK Cement Posts A Decent Performance For June Quarter
DSIJ Intelligence / 10 Aug 2012
JK Cement, a Rajasthan-based cement manufacturing company, announced decent results for the June 2012 quarter. The net sales of the company have increased significantly by 21 per cent YoY to Rs 737 crore. The net profit has also seen decent improvement and has jumped by 38 per cent on a YoY basis to Rs 80 crore. This was mainly on account of the increase in the firm cement prices during the quarter. Delayed monsoon and supply issues helped the company to maintain the cement prices firm at the Rs 300 mark for per 50 kg of cement.
| Financial Performance June 2012 Quarter | |||||
|---|---|---|---|---|---|
| Particulars | Jun-12 | Jun-11 | YoY | Mar-12 | QoQ |
| Sales | 737.46 | 609.03 | 21.1 | 809.4 | -8.9 |
| Raw Material | 93.72 | 72.82 | 28.7 | 95.57 | -1.9 |
| Power & Fuel | 190.94 | 175.01 | 9.1 | 193.86 | -1.5 |
| Operating Profit | 158.39 | 132.26 | 19.8 | 202.75 | -21.9 |
| Interest | 37.45 | 28.05 | 33.5 | 39.34 | -4.8 |
| Net Profit / Loss | 68.87 | 49.9 | 38.0 | 80.35 | -14.3 |
| OPM (%) | 21.47 | 21.71 | -0.2 | 25.04 | -3.6 |
| NPM (%) | 9.18 | 8.19 | 1.0 | 9.69 | -0.5 |
| EPS (Rs) | 9.85 | 7.14 | 38.0 | 11.49 | -14.3 |
On the operating side, the company has shown significant improvement. The operating profit of the company has increased by 19 per cent on a YoY basis. However, due to increase in the raw material cost and freight charges, the operating margin has remained almost flat on a YoY basis at 21.47 per cent. However, due to lower depreciation during the quarter, the net profit of the company has improved by 100 bps on a YoY basis to 9.18 per cent.
The improvement is largely because of the increase in the realisation during the quarter. However, the increase in net profit is also due to an increase in the ‘other’ income that jumped by almost 200 per cent to Rs 19 crore during the quarter. In conclusion, we believe that the company has posted strong results for the June quarter mainly on account of higher realisation and delayed monsoon. However, with the revival of the monsoon the demand will slow down and subsequently we will see a drop in the cement prices. Both these factors will lead to a subdued quarter for the cement companies. The pressure will be on the margins too due to higher raw material and freight costs.
At its CMP of Rs 150, the company is trading at a PE multiple of 8x on an annualised EPS of Rs 28. Also on an YTD basis the stock has jumped by almost 123 per cent and at this valuation the stock is looking expensive. Therefore we recommend that investors should avoid the stock from a short-term perspective.If you want to stay updated with the share market news today, keep a close watch on the indian stock market today with real time movements like sensex today live and overall stock market today trends. Investors tracking ipo allotment status, ipo news today, or the latest ipo india can also follow daily updates along with bse share price live data. Whether you are learning how to invest in stock market in india, preparing for a market crash today, or searching for the best stocks to buy in india, insights on top gainers today india, top losers today india, trending stocks india and long term stocks india help in making informed investment decisions.