Ambuja Cements Ltd. share price target

Ambuja Cement (ACEM) Q3CY20 EBITDA was 30% / 14% higher than our and consensus estimate driven by the better than forecasted volume. Despite exposure to West region, ACEM volume increased by 8% YoY vs our estimate of -10% YoY. Volume growth is led by market share gain, as industry has witnessed decline for the same period. We have factored this in our CY20/CY21 estimate, which led to increase in the EBITDA by 12%/11% (exhibit 10). Consequently, TP is revised to Rs245 (earlier Rs205, exhibit 11) on unchanged EV/EBITDA valuation of 11x (which is average EV/EBITDA of last 10 years). ACEM has approved an interim dividend of Rs17 (implying yield of 7%), we see...

Ambuja Cements surprised positively in Q1CY20. Revenues for the quarter were at | 2828 crore (vs. I-direct estimate of | 2,780 crore), down 3.4% YoY. Sales volume declined 9.6% YoY to 5.77MT (in line with I-direct estimate: 5.73 MT) as business got impacted in March 2020 due to announcement of a nationwide lockdown. Realisations cushioned the revenue fall, growing 6.6% YoY to | 4900/t (vs. I-direct estimate of | 4,849/t) as prices remained elevated in its major markets combined with higher sales of premium products. On the cost front, total costs per tonne remained broadly flat at...

Ambuja Cement reported a rather better than expected set of numbers in Q2CY20 despite a more than month long lockdown across the country. The standalone revenue stood at Rs 2,177 Cr, down by 27.0% YoY/23.0% QoQ, EBITDA fell by 14.8% YoY/1.3% QoQ to Rs 595 Cr and Net Profits stood at Rs 453 Cr, declining by 10.0% YoY/13.6% QoQ. EBITDA margins improved to 27.3% during the quarter from 21.3% in Q1CY20 and 23.4% in Q2CY19. Sales volume during the quarter de-grew by 29% YoY to 4.19 MT (million tonnes) while realization per tonne increased by 2% YoY. Total operating...

Ambuja Cement (ACEM) delivered strong set of Q2CY20 earnings with 35%/30% beat on ours/consensus EBITDA estimates. Lower than expected costs drove the beat in earnings. Cement demand positively surprised us as well as the street with decline of 12% YoY in May (against street expectation/PLe of 40%/15% drop) and growth of 1% YoY in June (against street estimate/PLe of 15%/5% drop). Based on...

Ambuja (ACEM) Q2CY20 EBITDA came sharply higher than our estimate and company reported its highest quarterly EBITDA/t at Rs1421. Beat in the number is driven by lower volume decline, better realization and lower other expenses. In line with its subsidiary ACC, ACEM has renegotiated on costs, reduced discretionary spend which led to lower other expenses at Rs2.8bn vs Rs5bn QoQ, Rs4.7bn YoY. Benefit from master supply agreement with ACC (leading to lower freight cost, other expenses) could continue to play in CY20/21. We have factored this in our CY20/CY21 estimate and EBITDA has now increased sharply by 35%/29% (exhibit 10). We have revised TP to...

4,155/t), led by lower freight cost (due to MSA with ACC) and sharp cuts in discretionary expenses (ad spends, travel, repairs, third-party services, etc.), which EBITDA/t improved 36% QoQ (+19% YoY) to INR1,421/t (v/s est. Mr. Akhoury was earlier the MD and CEO of Ambujas subsidiary ACC, where he is credited with arresting market share decline for the company after a gap of 10 years as well as implementing strong cost control. As a result, we expect ACEMs EBITDA per ton to be marginally lower in the next two years and underperform peers. This would be due to the fixed cost addition starting next year from its green-field plant (Marwar-Mundwa) with slow volume ramp-up. This would be due to the fixed cost addition starting next year from its green-field plant (Marwar-Mundwa) with slow volume ramp-up.

ACEM posted 27.0% YoY de-growth in revenue to Rs21.8 bn due to 28.0% YoY volume de-growth to 4.2mt and 1.3% YoY (5.8% QoQ) realization growth to Rs5,195. EBITDA de-growth restricted to 14.8%...

Given the steep increase of Rs7590/bag in April-May, softness w as South expected in prices. Prices in (Rs/bag) AP/Telangana fell Rs20/bag MoM as it w itnessed steepest increase. Prices in...

Our channel check suggests, average cement prices at an all India level is up 8% MoM in May-2020. In the environment of soft demand, price hike is implemented for partial recovery of high fixed costs. We see a trend in the market where-in from government to companies, many following a strategy to increase taxes / prices to support their financials. But for the sustenance of price hike in commodity (cement), demand revival is the key element according to us. Cement industry production decreased by 25% YoY for Mar 2020 (latest data available). Companies have commenced opening of the plant starting of 20th April....