“Ambuja Cements, net sales for Q1CY12 grew by 19.7% Y-o-Y to Rs 26,609 mn. This was mainly driven by higher volumes and better realisation. EBIDTA margins for Q1CY12 stood at 29% showing an increase of 80bps on Y-o-Y basis and 995bps on Q-o-Q basis. Net profit for Q1CY12 declined by 23.4% Y-o-Y to Rs 3,122 mn, the decline was attributable to change in depreciation method for fixed assets pertaining to captive power plant from Straight Line Method (SLM) to Written down value method (WDV). As a result of this, company has recognised an additional depreciation of Rs 2,890.8 mn. Amount relating to earlier years has been disclosed as exceptional item amounting to Rs 2,791.3 mn.”
“Blended realisation of cement per bag for Q1CY12 stood at Rs 220/bag showing a growth of 9.0% Y-o-Y. This was mainly on account of strong demand in the regions where Ambuja gets its major chunk of revenue (North (40%), West (40%) and East (20%)). Sales volumes for Q1CY12 grew by 9.8% on Y-o-Y basis to 6.05 mn MT. EBIDTA margins for Q1CY12 stood at 29% showing an increase of 80bps on Y-o-Y basis and 995bps on Q-o-Q basis. This was mainly on account of more than proportionate increase in realisation as against an increase in cost of production. On per bag basis the cost of production for Q1CY12 rose by 7.8% Y-o-Y to Rs 156, whereas realisation grew by 9% Y-o-Y to Rs 220. The power & fuel costs which accounted for 33.2% of the total expense rose by 18.5% Y-o-Y for Q1CY12 on per bag basis and the freight costs per bag also rose by 7.7% Y-o-Y for Q1CY12.”
“We maintain our target of Rs 205.7 arrived based both on EV/MT and EV/EBIDTA on a differential weightage, with a BUY rating on the stock. For the quarter ended March 31, 2012, Ambuja has reported topline growth of 19.7% which is slightly below our estimates of 22.5% Y-o-Y. However, at the EBIDTA level company has reported better numbers owing to lower increase in power & fuel costs and transportation costs as compared to ACC. Demand for cement is expected to remain strong in Q1FY13; however, owing to recent intervention by CCI on cartelisation we don’t expect a strong up tick in cement prices in Q1FY13. We believe that RBI’s move (50bps cut in repo) might trigger demand from housing and industrial segment in the near term. Also projects like DMIC (Delhi Mumbai industrial corridor) coupled with encouraging data on project implementation under public private partnership should help cement companies in the long run,” says GEPL Capital research report.
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