Ambuja Cement has reported a fall of 11% at Rs 348 in its second quarter CY11 net profit, as subdued demand and higher coal prices played a spoilsport during the quarter
However, net sales increased 6% to Rs 2,173 crore from Rs 2,048 crore Year-on-Year. These numbers are slightly ahead of CNBC-TV18 poll saw net profit at Rs 365 crore and net sales of Rs 2165 crore.
EBITDA margin too declined to 27.5% versus 31.4% Y-o-Y. Meanwhile shares of the cement major declined 2% at 128.70 at 13.30 hours.
Key highlights during the quarter
Cement production declines 6% at 5.20 million tones
Sales volume came down 2.4% at 5 million tones
Input cost went up by atleast 20%
Analysts are not surprised by these numbers as Ambuja has sharply under-performed by declining 12% on the broader market over the past three months. And this is because investors are increasingly nervous on the outlook for this sector, given a rapidly rising cost structure. Further, the onset of monsoon, there is typically a slackening in demand from infrastructure industry.
The two key input costs for the cement industry, namely power and fuel, coupled with freight charges have seen an upward trend, on a per-tonne basis. In the case of power and fuel costs, cement companies have been grappling with a near 30% rise in coal prices, for supplies from Coal India, since end February, say analysts. Also, imported coal prices are up nearly 20% y-o-y in the quarter under review.
Source: www.moneycontrol.com
Thanks,
Gaurav Agarwal
Head Dealer
DENIP consultants Pvt Ltd
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