Arihant Capital 's research report on Ambuja Cements
Ambuja Cement reported a rather better than expected set of numbers in Q2CY20 despite a more than month long lockdown across the country. The standalone revenue stood at Rs 2,177 Cr, down by 27.0% YoY/23.0% QoQ, EBITDA fell by 14.8% YoY/1.3% QoQ to Rs 595 Cr and Net Profits stood at Rs 453 Cr, declining by 10.0% YoY/13.6% QoQ. EBITDA margins improved to 27.3% during the quarter from 21.3% in Q1CY20 and 23.4% in Q2CY19. Sales volume during the quarter de-grew by 29% YoY to 4.19 MT (million tonnes) while realization per tonne increased by 2% YoY. Total operating cost of the company fell sharply by 30.0% YoY/ 26.2% QoQ. Both Power & Fuel and Freight expenses per tonne fell by 5% YoY while raw material and other expenses per tonne fell by 16% YoY leading to the sharp uptick in EBITDA margins. EBITDA per tonne improved by 19% YoY to Rs 1,422 per tonne.
We believe the domestic cement industry will revive by the last quarter of CY20 and hence maintain our positive expectations considering the experienced management & low debt levels. Our SOTP valuation yields a fair value of Rs 221 for the stock. We continue to maintain our ‘Hold’ rating on the stock.
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