India Cements Net Down 60% in Q4FY13

India Cements announced its Q4FY13 results on May 20, 2013. Although the company’s topline was well in line with the street expectations, its margins shrank massively. The company’s shares closed the day lower by 1%.

In the elapsed quarter, India Cements’ revenues rose by 7.23% to Rs 1199.3 crore as compared to those in Q4FY12. An improvement in volumes coupled with a rise in cement prices were the reasons behind this growth.

However, its margins took a massive hit, with the EBIT falling by 31.91% to Rs 104.21 crore and its net profit margin down by 59.52% to Rs 26.28 crore on a yearly basis. This translates into a decline in its operating profit margin and net profit margin by 499 basis points and 361 basis points respectively.

The reduction in operating margin was fuelled by a number of factors. Of these, the prominent ones were the 7.45% increase in power and fuel costs and a 28.63% increase in transportation and handling costs.

It is clear that the margin pressures have heavily impacted the financial performance of India Cements, which has shrugged off the increase in the volumes and prices of cement. The result has disappointed the street and the stock is likely to face downward pressures hereon.