Board approves share buyback plan
The Ramco Cements registered a 28% increase in standalone net profit to Rs 151.88 crore for the third quarter ended December 2016 on the back of 18% gain in total income from operations to Rs 1111.29 crore, due to rise in cement sales volume partially offset by fall in cement sales realisation. OPM reduced by 50 bps to 26.5%.
The Company continued to focus on cost reduction measures and reduced the operating cost significantly and is confident of sustaining it in the forthcoming quarter also.
The Company has reduced the borrowings by around Rs 530 crore during the year from 1st Apr 2016 to 6th Feb 2017 out of internal accruals. The Company has sustained its efforts towards debt reduction since last year which has resulted in lower finance cost thereby improving its profitability. The Company has built up stock of fuel with a view to protect it from further spiralling effect on petcoke prices.
Performance for quarter ended December 2016
Ramco Cements standalone total income from operation inclined 18% YoY to Rs 1111.29 crore for the third quarter ended December 2016, due to rise in cement sales volume were more than offset by fall in cement sales realisation. The cement sales volume (including exports) inclined 22.3% to 19.88 lakh tonne, but cement sales realization fell 5.1% to Rs 5428 per tonne.
The Operating Margin (OPM) reduced by 50 bps to 26.5%. As per percentage to sales and net of stock adjustments, power & fuel cost dropped 80 bps to 11.6%, employee benefit cost shed 70 bps to 6.3% and raw material cost fell 20 bps to 13.7%. However, freight & handling cost rose 10 bps to 16% during the period.
As a result, the operating profit grew by 16% to Rs 294.44 crore. The Other income inclined 1% to Rs 1.85 crore. The interest cost fell 38% to Rs 26.11 crore, due to reduction in borrowing from internal accruals. Depreciation cost fell 3% to Rs 66.14 crore. As a result the Profit before Tax (PBT) inclined 40% to Rs 204.04 crore.
The net tax expenses for the quarter increased 87% to Rs 52.16 crore. Effective tax rate inclined 650 bps to 25.6%. Thus, the Net profit grew by 28% to Rs 151.88 crore.
Nine month performance
Sales revenue for the period was up 11% to Rs 3405.64 crore. With expansion of OPM by 180 bps to 28%, the operating profit went up by 19% to Rs 955.28 crore. Other income was down 8% to Rs 5.62 crore, thus, PBIDT jumped by 19% at Rs 960.90 crore. Further with drop in interest cost by 39% to Rs 83.41 crore, fall in depreciation allowance cost by 1% to Rs 199.13 crore, the PBT grew 44% to Rs 678.36 crore. With jump in taxation provision by 48% to Rs 163.54 crore, the Net profit increased by 43% to Rs 514.82 crore.
BUY-BACK
The board of directors of the company on 07-Feb-2017 approved the proposal of buyback of its fully paid up equity shares for an aggregate amount not exceeding Rs 180 crore for a price not exceeding Rs 720 per equity share.
At the maximum buy-back price and for maximum buy-back size, the maximum number of equity shares to be bought back would be 25 lakh equity shares, which is 1.05% of paid up equity shares.
The scrip is currently trading at Rs 680.85 (07 February 2017) on the BSE.