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Recommendations India

Ambuja Cements 1QCY2014 performance highlights and results update

May 2, 2014, Friday, 11:24 GMT | 06:24 EST | 14:54 IST | 17:24 SGT
Contributed by Angel Broking

For 1QCY2014, Ambuja Cements (ACEM) posted a reasonably strong performance on the operational front. The company’s EBITDA rose by 6.3% on a yoy basis (up 91% on a sequential basis).

OPM at 22.3%, up 53bp yoy: For 1QCY2014 ACEM’s stand-alone top-line rose by 3.7% yoy to Rs.2,640cr. The growth was driven by a 2% yoy increase in realizations to Rs.4,356/tonne and a 1.7% yoy increase in volumes to 6.1mn tonne. Higher realizations were on account of steep increase in cement prices in the northern and western regions during the quarter. On a sequential basis the company’s realization was higher by 5.2%. Aided by higher realization, the company’s OPM increased by 53bp yoy to 22.3%. The Adjusted PAT (adjusted for tax credit of Rs.95cr) rose by 14.6% yoy to Rs.425cr.

Outlook and valuation: We expect ACEM to register an 11% CAGR in top-line over CY2013-15E. The company’s bottom-line is expected to grow at a CAGR of 24.1% over the same period. At the current market price, the stock is trading at an EV/tonne of US$139 on CY2015E capacity, which we believe is fair. Hence, we continue to remain Neutral on the stock.