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Company Report

Gujarat Ambuja Cements

Gujarat Ambuja Cement Ltd wound up another year of excellent performance. Total income was up 26 per cent from the year-ago period at Rs 1,770.96 crore (Rs 1,405.74 crore) against a 27 per cent rise in total expenditure at Rs 1,549.23 crore (Rs 1,219.22 crore). Despite a higher rise in total expenditure, net profit rose by 19 per cent from the corresponding quarter at Rs 221.73 crore (Rs 186.52 crore).

Cement prices have been under pressure throughout the year. GACL’s net sales for the year at Rs 1,734.72 crore (Rs 1,384.16 crore) was up 25 per cent. Sales volumes were up 37 per cent to 9.8 million tonnes with a 35 per cent increase in domestic sales and a 46 per cent improvement in export. Lower pricing power saw domestic sales realisation drop by 9 per cent, while export realisation was up by just about 1 per cent.

Operational cost at Rs 1258.18 crore (Rs 939.95 crore) was up 34 per cent. There has been an across the board increase in all the cost components for GACL during the year. Raw material cost was up 30 per cent, while staff cost, power and fuel consumption was up 31 per cent and 33 per cent, respectively. Freight and forwarding costs, which constitute a major part of the overall operational spending, was up 59 per cent. Other expenditure too went up by 25 per cent. The rise in costs being much higher than the increase in revenues have seen margins shrink with operating profits managing to rise by only 7 per cent from the year-ago period at Rs 476.54 crore (Rs 444.21 crore).

With tax provision having gone down by 30 per cent to Rs 31.47 crore (Rs 44.82 crore), net profit was up 19 per cent from the year-ago period at Rs 221.73 crore (Rs 186.52 crore).

GACL’s fourth quarter performance has been pretty much the same as in the first three quarters. Net sales was up 31 per cent, while higher costs hit margins. OPM was down to 28 per cent from 30 per cent during the same period last year. Higher other income and savings in interest cost have boosted the overall profits of the company with net profits shooting up by 92 per cent over the year-ago period to Rs 78.01 crore (Rs 40.68 crore).

The stock has continuously gone up significantly in the recent bull-run. Currently trading at Rs 231.50 it discounts its full year EPS of Rs 14.29 by 16 times.

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