The stock of JK Cement rallied over 7 per cent on Monday, on the back of strong September quarter results. The company’s revenues grew 33 per cent during the September quarter compared to the same period last year. Net profit stood at Rs 32.3 crore, as against a loss of Rs 21.45 crore during the same quarter last year.
JK Cement’s strong sales and earnings growth was given a thumbs-up by the market, considering that other large players such as ACC and Ambuja Cements reported lacklustre sales volumes, managing profit growth only through higher realisation and cost savings.
During the September quarter JK Cement commissioned a 1.5 million tonnes per annum (mtpa) grey cement unit at Mangrol, Rajasthan. The company has about 8.5 mtpa of grey cement capacity with a presence in Rajasthan and Karnataka. JK Cement has a national presence in white cement that contributes about a third to its revenues.
With industry volume growth at about 5-6 per cent, JK Cement’s 33 per cent sales growth during the September quarter appears to be driven by market share gains and a higher than average realisation.
The company’s operating margin stood at 10.9 per cent versus 6.5 per cent in the September quarter last year. Despite higher power and fuel costs (23.8 per cent of sales vs. 22.9 per cent in the same period last year), the company managed to improve its margins. This is thanks to savings in transportation costs and a marginal drop in raw material expenses, along with better realisation.