Ambuja Cements Posts Subdued Q1CY13 Numbers
Vinaya Patil / 03 May 2013
The net sales of the company declined by 3.3% on a yearly basis for Q1CY13, owing to the fall in cement sales volume by 4.1%. However, its profit grew by 56.3% due to a higher other income and lower tax outgo.
Ambuja Cements (ACL), one of the leading cement manufacturing companies in India and a part of the global cement major Holcim, posted a bad set of numbers for its Q1CY13. The company follows a calendar year as its financial year. The net sales of the company have declined by 3.3% on a yearly basis to Rs 2545 crore for the first quarter of CY13 against the market expectation of a slight increase in the net sales.
A decline in the cement sales volume by 4.1% in the same period to 5.8 million tonnes (6.05 million tonnes) led to such a fall in its net sales. This does not bode well for the company as the Jan-March 2013 quarter remains one of the best quarters for cement companies.
A drop in net sales coupled with an increase in employee costs (17% to Rs 120.7 crore) and change in inventories (432 % to Rs 68 crore) on a yearly basis led to a sharp drop in the EBITDA by 27.8% to Rs 553 crore in the same period. The EBITDA margins too declined to 21.03% against the market expectation of 23%.
Nonetheless, the net profit after tax for ACL has increased by a whopping 56.3% on a yearly basis to Rs 488 crore. This increase was mainly attributed to a lower tax outgo by 38% to Rs 81.13 crore for Q1CY13 and a higher other income by 61% (Rs 149.5 crore for Q1FY13) in the same period. The company also wrote back Rs 117crore of income tax provision pertaining to its previous provision which reduced its tax expense.
In case of other income, during the quarter, the company had Rs 28 crore of write-back towards interest on income tax, which boosted its other income. Besides, last year the same quarter had an exceptional item to the tune of Rs 279 crore representing additional depreciation charges, which lowered last year’s profit and we therefore saw such a sharp jump in profits in the quarter.
The scrip is currently trading at Rs 188, discounting its last 12-month earnings by 20 times, which looks quite expensive, especially looking at the subdued demand outlook for the cement sector. We thus ask readers to stay away from the counter.
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