Ambuja Cements Ltd. share price target

Ambuja Cements (ACL) has reported a better-than-estimated operating performance in 4QCY17, mainly owing to higher-than-expected volume growth and better operational efficiencies. Operating profit grew by sharp 48% YoY and 39% QoQ to Rs4.4bn vs. our estimate of Rs3.9bn. Despite a sharp spike in Power & Fuel cost/tonne and freight cost/tonne, operating cost/tonne declined by 1% YoY and 6% QoQ to Rs3,681, led by cost optimisation initiatives. EBITDA/tonne stood at Rs746 vs. Rs586 and Rs628 in 4QCY16 and 3QCY17, respectively. EBITDA margin rose by 322 bps YoY to 16.8%. ACL's sales volume surged by 16% YoY and 17% QoQ to 5.9mnT led by better demand scenario in Eastern, Northern and Gujarat markets. Though we moderately...

Further, operational efficiency is here to stay. We reiterate Gare Palma coal block and newly won limestone reserves could bring down the cost. However, we cast our doubt on the strategy of higher usage of pet-coke/alternate fuels. With asset-light debottlenecking and operational efficiency yet to be explored the...

Cost/t declined 5% QoQ (flat YoY) to INR3,700 (est. of INR3,821) due to lower other expenses (-3% YoY), led by fixed cost-optimization measures. RM cost/t, including inventory adjustment, declined 63% YoY/65% QoQ. Hence, adj. EBITDA/t of INR865 (+315 YoY/+22% QoQ) was higher than our estimate of INR649 due to lower cost. EBITDA increased 52% YoY to INR5.08b (est. of INR3.9b), translating into a margin of 18.9% (+3.9pp YoY, +3.7pp QoQ). Tax rate was higher at 24.5% in 4QCY17 v/s 8% in 4QCY16. Adj. PAT rose 56% YoY to INR2.95b.

Beat on cost controls; growth constrained by clinker capacity Ambuja's 4QCY17 EBITDA exceeded expectations primarily on lower costs. Revenues grew by 20% YoY primarily on volume growth of 17%. Realisations grew by 2% YoY; remained flat sequentially. EBITDA/t, reported at INR865/t vs INR658/t grew realisation growth, lower raw material cost and other expenses more than offset the freight and power/fuel cost escalations. We believe Ambuja's long term growth is constrained by the clinker capacity and limited expansion plans (phase 1 expansion of 1.7MTPA clinker at Marwar Mundwa expected by 2HCY20). As a result we expect Ambuja's market share to decline in the interim and see...

Ambuja Cements' (ACEM) result was above estimates with EBITDA at Rs4.4bn against our estimate of Rs3.8bn and EBITDA/tonne at Rs750 against our estimate of Rs655, led by lower opex. Key surprise was sequential decline in other expenses. Sales volume was up 15.3% yoy at 5.87mt, supported by low base (volume declined 7.8% in Q4CY16). Realization grew by 3.5% yoy to Rs4,450/tn (vs. estimated Rs4,451/tn). EBITDA/tn stood at Rs750 vs. Rs586/Rs617 in Q4CY16/Q3CY17. with clinker capacity of 3.1mt (phase I of 1.7mt clinker unit by H1CY20). We would await more clarity on this project, as it is being talked about for the last few years....

The company has reported net sales of Rs.5376.87 crores during the period ended September 30, 2017 as compared to Rs.4471.51 crores during the period ended September 30, 2016. The company has posted net profit of Rs.351.29 crores for the period ended September 30, 2017 as against Rs.234.31 crores for the period ended September 30, 2016. The company sold 10.98 million tonne of cement during the quarter, a rise of 14.9 per cent...

With near term numbers missing our forecasts, we cut CY17E EPS by 3%. However, with asset-light debottlenecking and operational efficiency yet to be explored, we increase CY18E EPS by 6%. Maintain Hold. Result Highlights and Investment Rationale Better-than-anticipated realization paves the way: Revenues were up 15% YoY to Rs23bn. Here, the September quarter volumes advanced by 11.6% YoY to 5.02mnt. And the realizations inched 3.2% YoY to Rs4,621/ton. Adding to that, inventory gains in past-- which lowered raw material outgo-- was missing. Yet this was offset by...

Maintain SELL, with a TP of Rs 220 (11/9x Sep-19 EV/EBITDA for ACEM/ACC). Ambuja Cement (ACEM) reported an EBITDA/t of Rs 617 (vs. estimate of Rs 766/t, (2.0)/(38.9)% YoY/QoQ). While volumes (5.03 mT, 9.8% YoY) and realisations (Rs 4,612/t, 5.9/(0.8)% YoY/QoQ) were strong, operating costs jumped 7.2/9.7% YoY/QoQ to Rs3,996/t. Both RM (12.1/7.0% YoY/QoQ) and P&F; costs (1.0/3.7% YoY/QoQ) spiked, with reported numbers likely being understated due to large inventory booked (Rs447mn).

Ambuja Cements (ACL) has delivered a dismal operating performance during the quarter, with its reported EBITDA growing by 10% YoY to Rs3.2bn vs. our estimate of Rs3.9bn. While all components of operational cost came broadly in-line with our estimates, a significant surge in raw material cost (+107% YoY and +18% QoQ) dragged its operating performance, owing to reversal of Rs446mn relating to contribution towards DMF following Supreme Court's order. Adjusting for this, ACL's EBITDA grew by 25% YoY to Rs3.6bn. EBITDA/tonne came in at Rs628 vs. Rs629 and Rs1,010 in 3QCY16 and 2QCY17, respectively. Notably, sales volume grew by 10% YoY (-17% QoQ) to 5.04mnT mainly aided by favorable demand in Northern and Eastern markets...

Revenues increased 15.1% YoY (down 18.9% QoQ) to | 2,319.6 crore (above I-direct estimate of | 2,087.7 crore) led by 11.6% YoY increase in volumes to 5.0 MT (vs. I-direct estimate of 4.5 MT) & 3.2% YoY increase in realisation to | 4,621 (vs I-direct estimate of | 4,654) On the margin front, EBITDA margin was flat YoY to 15.3% (vs Idirect estimate of 13.8%). EBITDA per tonne increased 3.1% YoY to | 706/tonne (vs I-direct estimate of | 644/tonne). The growth in EBITDA/t was lower than topline growth mainly due to a sharp increase in raw material cost on a per tonne basis...