Volume growth remained flat as demand remain weak due to onset of monsoon season
CMP Rs204, Target Rs220, Upside 8.3%
Jump in cement realization drives 19% yoy revenue growth, in-line with expectation
Volume growth remained flat as demand remain weak due to onset of monsoon season
Rise in power and fuel cost restrict margin expansion
PAT grew 77% yoy boosted by higher other income; meets estimate
Maintain Market Performer with 9-mth price target of Rs220
(Rs mn) | Q3 CY12 | Q3 CY11 | % yoy | Q2 CY12 | % qoq |
Net sales | 21,752 | 18,337 | 18.6 | 25,785 | (15.6) |
Material costs | 462 | 1,442 | (68.0) | 1,161 | (60.2) |
Personnel costs | 1,151 | 1,032 | 11.5 | 1,237 | (6.9) |
Power and fuel costs | 5,623 | 4,950 | 13.6 | 5,991 | (6.1) |
Freight cost | 5,035 | 4,161 | 21.0 | 5,871 | (14.2) |
Other overheads | 4,262 | 3,558 | 19.8 | 4,176 | 2.0 |
Operating profit | 5,219 | 3,194 | 63.4 | 7,349 | (29.0) |
OPM (%) | 24.0 | 17.4 | 657 bps | 28.5 | (451 bps) |
Depreciation | (1,373) | (1,079) | 27.3 | (1,215) | 13.0 |
Interest | (166) | (138) | 20.0 | (180) | (8.3) |
Other income | 894 | 571 | 56.6 | 783 | 14.2 |
PBT | 4,575 | 2,548 | 79.5 | 6,736 | (32.1) |
Tax | (1,535) | (834) | 84.1 | (2,047) | (25.0) |
Effective tax rate (%) | 33.6 | 32.7 | 30.4 | ||
Adjusted PAT | 3,040 | 1,715 | 77.3 | 4,689 | (35.2) |
Adj. PAT margin (%) | 14.0 | 9.4 | 462 bps | 18.2 | (421 bps) |
Reported PAT | 3,040 | 1,715 | 77.3 | 4,689 | (35.2) |
Ann. EPS (Rs) | 7.9 | 4.5 | 77.3 | 12.2 | (35.2) |
Jump in cement realisation drives revenue
Ambuja Cements (ACL) revenues grew 18.7% yoy to Rs21.7bn; marginally above our estimate of Rs21.3bn. Realization improved higher than expected at 20% yoy and stood flat qoq (against our expectation of 2% qoq drop). Cement volumes remained flat as revival in monsoon translated into sluggish demand during August and September.
Surge in power and fuel cost restrict margin expansion
Operating margins for ACL expanded by 657bps yoy as against our estimate of 750bps improvement. OPM was below our estimate on back of A) Surge in power and fuel cost, which stood at 1,196/ton due to rise in domestic coal prices and B) Other overheads being higher on account of maintenance cost. Adjusted for inventory, raw material costs edged lower (stood at Rs98/ton against an average of Rs240/ton over the previous two quarters).
PAT growth of 77% yoy was as per expectation and supported by other income (+57% yoy and +14% qoq). Higher depreciation and interest outgo was on account of augmentation of new capacity and change in policy pertaining to fixed asset (CPP).
Retain Market Performer; prices to firm up in next two months
We expect cement prices to increase further in the next two months on back of onset of peak construction season. A revival in sentiments has resulted in pick-up in cement demand from real estate and infrastructure segment. We expect the sharp price increase to result in strong yoy profit for ACL in 4Q CY12. We upgrade our earning estimates for CY13 by 5% to reflect the strong pricing scenario in key eastern, northern and western markets. Retain market performer with a revised price target of Rs220.
Y/e 31 Mar (Rs m) | CY11 | CY12E | CY13E | CY14E |
Revenues | 85,948 | 102,730 | 116,846 | 137,318 |
Yoy growth (%) | 14.2 | 19.5 | 13.7 | 17.5 |
Operating profit | 19,863 | 27,556 | 36,754 | 43,592 |
OPM (%) | 23.1 | 26.8 | 31.5 | 31.7 |
Pre-exceptional PAT | 12,448 | 18,345 | 23,343 | 27,763 |
Reported PAT | 12,206 | 18,345 | 23,343 | 27,763 |
Yoy growth (%) | (3.4) | 50.3 | 27.2 | 18.9 |
EPS (Rs) | 7.3 | 10.8 | 13.8 | 16.4 |
P/E (x) | 27.8 | 18.8 | 14.8 | 12.5 |
Price/Book (x) | 4.3 | 3.7 | 3.0 | 2.4 |
EV/EBITDA (x) | 16.4 | 11.5 | 8.1 | 6.3 |
Debt/Equity (x) | 0.0 | 0.0 | 0.0 | 0.0 |
RoE (%) | 16.2 | 21.1 | 22.2 | 21.3 |
RoCE (%) | 21.2 | 27.9 | 30.2 | 29.2 |
Aug 11, 2022
Aug 11, 2022
Aug 11, 2022
Aug 11, 2022
Aug 11, 2022
Aug 11, 2022
Aug 11, 2022
Aug 11, 2022
Aug 11, 2022
Aug 11, 2022
Aug 11, 2022
Aug 11, 2022
Aug 11, 2022
Aug 11, 2022
Aug 11, 2022
The laws of the financial world are different from the physical world. You can have prolonged periods of time, when sanity takes a back seat and excesses happen.
R. Venkataraman Aug 20, 2021
Retail trading or day trading has exploded because of falling brokerage rates, democratization of information, higher transparency and mobile platforms.
R. Venkataraman Jun 15, 2021
My simple message for dear readers is, if you don’t have any desperate need for funds, then don’t do anything.
R. Venkataraman May 12, 2021
The blow up of a US hedge fund has resulted in WhatsApp university offering many courses on what went wrong with Bill Hwang and Archegos.
R. Venkataraman Apr 09, 2021
The expensive valuations have been sustained by strong rebound in corporate earnings which led to ~8% upgrade in FY22 Nifty EPS since October 2020.
R. Venkataraman Mar 26, 2021
We believe the interest rates are likely to have bottomed due to inflationary pressure, large government borrowings and normalizing credit growth. Hence rate sensitive sectors should be avoided in our view.
R. Venkataraman Feb 17, 2021
As markets make new highs, one gets more emails and messages, which highlight the accomplishments of traders who have found a formula for making money.
R. Venkataraman Jan 27, 2021
Data does not seem to convincingly prove that short periods of high returns are always followed by meagre returns. Only in 4 instances, we had negative returns in the subsequent year.
R. Venkataraman Jan 01, 2021
Since September end, Bankex is up 16% with large banks like ICICI Bank, Bandhan up 20-27%, Housing Finance Companies like Repco, LICHF, PNB Housing are up 50%-100% from their six-month lows.
R. Venkataraman Oct 13, 2020
Morgan Housel’s 'The Psychology of Money' explains in detail the role of human biases in investment decisions.
R. Venkataraman Sep 26, 2020
Per Order for ETF & Mutual Funds Brokerage
Per Order for Delivery, Intraday, F&O, Currency & Commodity