Ambuja Cements Ltd. share price target

For Q2CY19, Ambuja reported mixed bag results vis--vis our expectations. Revenues remained flat YoY at | 2978 crore (below I-direct estimate of | 3167 crore). While realisations grew 8% YoY to | 5120/t (vs. I-direct estimate of | 4900/t), the same was overshadowed by a dip in volumes by 8.6% YoY to 5.82 MT (vs. I-direct estimate of 6.45 MT) owing to weak demand in the north and west regions where Ambuja has a strong presence. Despite flattish revenues, better realisations helped the company register 12.2% growth in EBITDA to | 698 crore (above I-direct estimate of | 653...

Profitability improves on account of higher realizations Volumes decline but realizations improve: Volumes declined 9% YoY to 5.8mt in 2QCY19, as the pace of construction activities slowed down due to liquidity issues in the market. However, realizations increased 9% YoY (+11% QoQ) to...

View: Robust realization drives EBITDA/tn growth; Accumulate ACEM posted 1.3% YoY decline in revenue to `29.8 bn due to 8.6% YoY decline in volume whereas realization went up 8% YoY. EBITDA grew 12.2% YoY to `7 bn, however, PAT declined 17.5% YoY to `29.8 bn mainly due to lower other income as dividend from ACC booked in Q1CY19 v/s Q2CY18. We expect 5.5/ 10.8%/ 7.9% revenue/ EBITDA/ APAT CAGR over CY18-20E led by (0.9%)/ 6% volume growth and 7.5%/ 2% cement realization growth in CY19E/ CY20E. ACEM gradually lost market share over last decade....

On a broad gauge, reported numbers of Ambuja Cement for Q1CY19, were disappointing on all major fronts except volumes and production efficiency. Volume growth remained in line with I-direct estimates at 6.37 MT but realisations disappointed, remaining flat YoY at ~| 4,600/t vs. our estimate of | 4,717/t. Revenues consequently remained moderately below I-direct estimates at | 2,928 crore. Premium products - Roof special, Cool walls and Pura Sand gaining traction, witnessing 14% growth YoY. On the profitability front, EBITDA margins dipped 189 bps to 15.8% below I-direct...

Over the past 10 years, ACEM steadily lost market share (from 12% to 8% currently). While the on-going expansions (3.1mn MT clinker and 1.8mn MT grinding in H2CY20E), should boost volume CAGR to 8% in CY19-21E, it won't help ACEM in regaining its lost ground. Hence we don't see ACEM's valuations to rerate in medium term. Pricing and cost tailwinds should drive 9/8% EBITDA/PAT CAGR during CY18-20E. We remain NEUTRAL with an SOTP based TP of Rs223. We value the standalone cement biz at 11x its Mar-21E EBITDA and ACEM's 50% stake in ACC at 20% holding disc. Key risks: Roll back in cement prices, surge in energy costs (crude led) and further delays in on-going expansions. We remain NEUTRAL on Ambuja Cement (ACEM) with TP of Rs 223 (SOTP based). During 1QCY19, while ACEMs standalone net sales rose 2% YoY to Rs 29.3bn, EBITDA declined 9% YoY to Rs 4.6bn. High other income (div from ACC) drove 38% PAT growth to Rs 3.8bn.

Ambuja reported weak Q1CY19 numbers with EBITDA of Rs4.63bn, 11% below ours and 15% below consensus estimates. Key reasons for disappointing earnings were lower than expected realization and weak volumes. Ambuja reported volumes of 6.37mn for the quarter which is up only 2.4% YoY compared to our expectation of 5% growth. Realizations declined by 1.6% QoQ against our estimate of 2% growth. Improved operating costs, which declined by 3.6% QoQ, restricted further slide in margins. EBITDA/mt came in at Rs727 vs Rs659 in Q3FY19. PAT at Rs4.27bn was higher on account of higher other income. We have rolled our valuation forward to CY20E EBITDA and our...

contrast to the better performance delivered by its peer companies, ACEM reported lowest EBITDA/t of Rs601 (v/s Rs961/Rs616 by UTCEM/ACC) below our estimates of Rs705. Company continues to lose its business excellence with the rising Fixed costs, pressure on realisations (due to intense competition and rising pace of capacity addition) and continuous contraction in market share. However, revival of industry's pricing power would mask these issues for a next couple of years and would drive the earnings for...

Ambuja Cements reported mixed set of Q1CY19 numbers which were below our estimates. Revenue increased 2.3% YoY to Rs 2928cr below our estimate of Rs 2945cr, EBITDA declined 8.6% YoY to Rs 463cr against our estimate Rs 515cr, while PAT jumped 57.1% YoY to Rs 427cr ahead of our estimate of Rs 362cr, mainly due to Rs 132cr as dividend from ACC (included in other income). We are bullish on Cement Sector from medium term perspective, however due to expensive valuations, we...

We reduce CY19/20 EBITDA estimates by 11.7%/11.9% as we have assumed lower sales volume/realization. We await clarity on the timeline for expansion plans in the North region. We maintain our Hold rating, with a revised target price of Rs206. In the cement...

Volumes grew 4.4% YoY to 6.13mt Cost/t increased 8% YoY (-3% QoQ) to 18 February 2019 power & fuel cost/t. EBITDA/t of INR659, thus, came in lower than our estimate of INR901. EBITDA declined 20% YoY but increased 13% QoQ to YoY, +0.4pp QoQ). Exceptional items amounting to INR2.4b were booked in the quarter. PAT stood at INR2.95b (-3% YoY) versus our estimate of INR3.2b, while reported PAT stood at INR5.37b. (1) Power & fuel cost increased due to high-cost inventory. (2) ACEM commissioned the Gare Palma coal block, which should help optimize fuel mix.