By Nigel D'Souza, Research Analyst at CNBC-TV18
Ambuja Cements' profit after tax is likely to grow by 94% to Rs 333 crore in the quarter ended September 2012 from Rs 171.5 crore in a year ago period.
Net sales are seen going up by 20% to Rs 2,170 crore from Rs 1,805.1 crore and earnings before interest, tax, depreciation and amortisation (EBITDA) up by 82% to Rs 530 crore from Rs 290.8 crore during the same period.
Analysts on an average expect EBITDA margin at 24.4% in the third quarter of current calendar year 2012 as against 16.1% in the corresponding quarter of last fiscal and 28.2 percent in the June quarter.
On quarter-on-quarter basis, however, net sales are likely to fall by 15% and EBITDA down by 27%. Profit after tax is expected to decline 29%. Sequentially results appear weaker due to seasonal weakness.
Investors should watch out for some clarification (if any) with respect to reports which suggest Holcim has been demanding royalty of 2% of revenue for technology support.
Topline will be aided by higher volumes and also higher cement prices in areas of its existence:
Sales volumes are expected to come in at 4.78 million tonnes, a growth of 1.5% year-on-year and degrowth of 14% quarter-on-quarter.
Cement prices in the western region, wherein it dispatches 40% of total, rose by 5.8% QoQ.
Ambuja Cements has no presence in South India where demand has reportedly slackened. Higher exposure to the North and West regions will help as utilisations have been better in comparison with other regions.
Delayed monsoon has further aided construction activity. Cement prices remained largely stable across regions during July-August but were down in September as monsoon picked up.
Ambuja cut cement prices in August end but diesel price hike has seen a renewed uptrend in prices:
The company has cut prices in the range of Rs 15-50 per bag in various regions on account of monsoon. But that have been offset somewhat by hike of Rs 10 per bag taken on account of the diesel price hike.
Ambuja Cements uses roadways for over 60% of its dispatches.
Margin will see a huge improvement owing to better realizations, higher volumes and lower operating costs (coal):
It will also be a beneficiary of declining international coal prices though gains have been cut owing to weak rupee. Ambuja imports 40% of its coal requirement from international markets.