Ambuja Cements Ltd. share price target

Ambuja Cement (ACEM) reported disappointing set of Q4CY18 earnings with Change in Estimates | Target | Reco miss across the fronts. EBITDA/t fell to multi-quarter low of Rs500 (PLe:Rs725) due to steep increase in costs and weak realisations. Lumpiness...

Ambuja Cements Ltd (ACL) reported subdued numbers for Q3CY18. While revenue growth at 12.7% YoY was in line with our estimates, the company disappointed on the profit front with a marginal 1.1% growth in EBITDA and 34.4% YoY decline in PAT. EBITDA margins contracted 158bps YoY to 13.7%, impacted by higher power & fuel and freight cost.

Ambuja's results were above our estimates on revenue terms but a miss on the margins and PAT front. Revenues increased 12.7% YoY (up 13.4% QoQ) to |2,614 crore (above I-direct estimate of |2530 crore) led by 9% YoY increase in volumes to 5.46 MT(vs I-direct estimate of 5.5 MT) and 3.6% YoY increase in realisation to | 4,787 (vs I-direct estimate of |4,600/t. EBITDA margin decreased 158bps YoY to 13.7% (vs I-direct est: 15.2%) mainly led by 13.1% YoY increase in power cost (led by...

Ambuja's Q3CY18 sales was better than our estimate, however, profitability was disappointing. Sales grew by 12.6% YoY to Rs26,139 mn mainly led by higher cement volumes at 5.54 mn tonnes (+8.8% YoY). Realization also increased marginally by 3.5% YoY to Rs4,787/tonne. However, EBITDA margin was below our forecast by 402bps mainly on higher than expected energy and freight expenses. EBITDA margin contracted 156bps YoY to 13.7%. Net profit fell by 34.4% YoY to Rs1,786 mn vs. our...

Lower than expected volume & realisation growth coupled with sharp increase in cost/tonne resulted in ACEM reporting weaker than expected performance. ACEM reported net income of ` 26.1bn (+12.6% YoY, -13.4% QoQ), 5.5% lower than D'est. Realisation at ` 4,787/tonne (+3.5% YoY, +1.1% QoQ). Cement despatches at 5.46 MnT (+8.8% YoY, -14.3% QoQ)....

Sales volume grew by 9% YoY to 5.5mnT (at a base of 10% YoY growth in 3QCY17), led by sustained demand environment in its key markets. Revenue grew by ~11% YoY to Rs25.2bn led by robust volume growth. Notably, sales volume grew by 5.8% YoY to 18.1mnT in 9MCY18....

We upgrade ACEM to BUY with unchanged TP of Rs230, as the recent stock price corrections has turned valuations attractive the stock is trading at 10.6x/9.4x its CY19/20E EBITDA. During Q3CY18, ACEM's standalone EBITDA rose a modest 5% YoY, as the strong 9% YoY volume growth benefits were moderated by high cost pressure. PAT declined 32% YoY on absence of dividend income from its subsidiary ACC, during the quarter. We model in 5% volume CAGR for CY17-20E amid no near term capacity expansion. The material supply agreement (MSA) with ACC should partly moderate the cost inflation going forward, thus aiding 9% EBITDA CAGR during CY17-20E....

Ambuja Cement (Ambuja)'s 3QCY18 EBITDA missed the expectations primarily on higher other expenses. Revenues rose 13% YoY on volume growth of 9%. Realisations improved by 3.6% on a YoY basis; sequential growth of 1%. EBITDA grew by 15.6% on a YoY basis. EBITDA/t was reported at INR 648/t (vs. INR 609/t in 3QCY17), grew as realisation improvement and lower other expenses was partially offset by increase in operating costs. We believe Ambuja's long-term growth is constrained by its clinker capacity and limited expansion plans (phase 1 expansion of 1.7MTPA of clinker at Marwar Mundwa expected by 2HCY20). As a result, we expect Ambuja's market share to decline in the interim. While the...

Ambuja Cements Q3 results were below our estimates with EBITDA at Rs3.6bn vs. our estimate of Rs4.4bn and OPM at 13.7% vs. our estimate of 17.5%. Opex/ton increased 9.9% qoq vs. our estimate of 6.4%. EBITDA/ton was Rs656 vs. our Rs737 estimate. Sales volumes were 5.46mt, up 8.5% yoy vs. our estimate of 7%. Capacity utilization was...

Ambuja Cements Ltd (ACL), a part of the global conglomerate LafargeHolcim (63.1% holding in ACL), is one of the leading cement players in India. The company has a cement grinding capacity of 29.7 MTPA with five integrated cement manufacturing plants and clinkerisation capacity of 17.7 MTPA.