ICICI Direct's research report on Ambuja Cement
Ambuja Cements reported a strong set of numbers, broadly beating I-direct estimates. Topline growth came in at 9.5% YoY to Rs 3,136 crore (I-direct estimate: Rs 3,005 crore), mainly led by 6.7% volume growth to 6.54 MT (I-direct estimate: 6.12 MT). Realisation grew 2.7% YoY to Rs 4,795/t (I-direct estimate: Rs 4,910/t). Profitability improved led by higher realisations and controlled production costs. EBITDA margin was at 17.5%, expanding 335 bps YoY (I-direct estimate: 17.5%). EBITDA/t for the quarter increased 27% YoY to Rs 837/t (I-direct estimate: Rs 860/t). Total costs per tonne by 1.4% YoY mainly driven by reduction in P&F and freight costs, offset partly by higher raw material costs and inventory adjustments. EBITDA grew 35.5% YoY to Rs 547 crore (I-direct estimate: Rs 526 crore). The company has elected to shift to the new tax regime. Accordingly, its tax expenses are significantly lower YoY. Adjusting for exceptional items in the base quarter, PAT increased 54% YoY to Rs 455 crore (I-direct estimate of Rs 377 crore).
Outlook
Ambuja Cements continues to have sufficient liquidity on its books despite being in capex mode. However, its slow pace of growth is not encouraging in comparison to its peers and also considering the cash flow strength that the company possesses. We thus maintain our HOLD rating on the stock with a target price of Rs 200.
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