India Cements slips 7% on disappointing September quarter results

The stock slipped 7% to Rs 90.65 on the BSE after the company reported net profit of Rs 14 million in September quarter against Rs 237 million in a year ago quarter.

Shares of India Cements have slipped 7% to Rs 90.65 per share on the BSE after the company reported a sharp 94% year-on-year (Y-o-Y) decline in its net profit at Rs 14 million in September quarter (Q2FY19), due to higher input cost. It had a profit of Rs 237 million in the year-ago quarter.

India Cements said the tough cement market conditions in south India arising out of regional imbalances in capacity coupled with a steep increase in the prices of fuel and petroleum products along with depreciation of rupee against dollar all had an impact on the operating performance of the company during the period under review.

Operational revenue grew 9% at Rs 13.91 billion against Rs 12.68 billion in the corresponding quarter of previous fiscal. EBITDA (earnings before interest, tax, depreciation and amortization) margin declined 310 bps to 11.2% in Q2FY19 from 14.3% in Q2FY18, on account of higher interest cost.

India Cements has entered into a share purchase agreement on 28 October 2018 for acquiring the entire shareholding of Springway Mining Private Ltd. in a phased manner at a total cost of Rs 1.83 billion with an objective of setting up a cement plant in Madhya Pradesh.

Motilal Oswal Securities cut EBITDA estimate by 7% for FY19 (unchanged for FY20).

“We cut our PAT estimate by 63% in FY19 and 4% in FY20 due to higher depreciation and interest rate on announced capacity expansion”, the brokerage firm said in result update with ‘neutral’ rating on the stock and 12-month price target of Rs 93.

At 11:28 AM; India Cements was trading 5.5% lower at Rs 91.75 on the BSE, as compared to 0.03% rise in the S&P BSE Sensex. A combined 6.99 million equity shares changed hands on the counter on the BSE and NSE so far.