Low base and better price helped JK Lakshmi Cement to clock over 10-fold jump in net profit at Rs 49.24 crore in third quarter of the current fiscal over Rs 4.6 crore in the corresponding quarter last fiscal.
Talking to reporters after announcing quarterly results, JK Lakshmi Cement's Chief Financial Officer Sudhir Bidkar said the company plans to launch a Rs 97.5 crore share buy-back programme by next month in an effort to restore shareholders' faith in the company.
"The rise in net profit is attributable to low base. We had only Rs 4.6 crore net profit in Q3 FY12. Besides, the price of cement also went up by 25% during the quarter over the same quarter last fiscal. Our sales too increased by 13% to 12.23 lakh tonne," Bidkar said.
Net sales of the company, which mainly markets its in the Northern region of the country, went up by 39% to Rs 438 crore against Rs 315 crore in the corresponding quarter last fiscal.
"However, it will be a tall order to sell over 12 lakh tonne cement in the current quarter since the Northern region is on an election mode," he said, adding the company had not effected any price hike since the beginning of the New Year.
On share buyback, Bidkar said the company board today approved buying back of shares to the tune of Rs 97.5 crore at a price not exceeding Rs 70 per share.
"The price is very attractive as it represents a premium of more than 43% over the average share price of last 15 days and 57% premium over the average share price of last 12 months," he said.
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JK Lakshmi's scrips today closed at Rs 61.50 apiece at the Bombay Stock Exchange, down 1.91% over previous day's closing.
After getting the approval of the market regulator Sebi, the buyback programme is likely to start by March this year and would remain open till February 7 next year, he said.
If the buyback is 100% execrcised, promoters' stake in the company would go up by over five% to nearly 50%. JK Lakshmi Cement has more than Rs 500 crore cash surplus.
"The buyback proposal reaffirms the company's belief in its strong fundamentals and future business prospects. Besides being a tax-efficient way of rewarding the shareholders, the buy-back shall enable the company to put a part of the available cash surplus to an optimum use," he said.