Ambuja Cements (Q4 CY12)

India Infoline News Service | Mumbai |

Maintain Market Performer with 9-mth price target of Rs211

CMP Rs200, Target Rs211, Upside 5.5%
  • Volume de-growth of ~4.5% translates into flat revenue growth; Improvement in realisations arrest fall 
  • Higher staff costs, Other overheads restrict margin expansion to mere 20bps; against an expectation of 470bps
  • Adjustment in depreciation drags PAT lower at Rs2.12bn; below estimate
  • Maintain Market Performer with 9-mth price target of Rs211
Result table*
(Rs mn) Q4 CY12 Q4 CY11 % yoy Q3 CY12 % qoq
Net sales 23,352 23,577 (1.0) 21,752 7.4
Material costs 1,433 3,357 (57.3) 462 210.1
Personnel costs 1,367 1,255 8.9 1,151 18.7
Power and fuel costs 5,473 4,714 16.1 5,623 (2.7)
Freight cost 5,816 5,074 14.6 5,035 15.5
Other overheads 4,764 4,681 1.8 4,262 11.8
Operating profit 4,501 4,496 0.1 5,219 (13.8)
OPM (%) 19.3 19.1 20 bps 24.0 (472) bps
Depreciation (1,855) (1,238) 49.9 (1,373) 35.1
Interest (243) (99) 146.1 (166) 46.6
Other income 881 651 35.4 894 (1.5)
PBT 3,284 3,811 (13.8) 4,575 (28.2)
Tax (1,164) (544) 113.9 (1,535) (24.1)
Effective tax rate (%) 35.5 14.3
33.6
Adjusted PAT 2,120 3,266 (35.1) 3,040 (30.3)
Adj. PAT margin (%) 9.1 13.9 (478) bps 14.0 (490) bps
Extra ordinary items - (243) (100.0) - -
Reported PAT 2,120 3,024 (29.9) 3,040 (30.3)
Ann. EPS (Rs) 5.5 8.5 (35.1) 7.9 (30.3)
Source: Company, India Infoline Research, *Standalone

Drop in volume restricts revenue growth
Ambuja Cements (ACL) revenues remained flat at Rs23.3bn; below our estimate of Rs26.3bn. The underperformance was largely due to lower dispatches (down 5% yoy) against expectations of a rise of 3%. Realizations improved in-line with expectations at 4.5% yoy and were lower by 1% qoq.

Surge in staff and other overheads costs restrict margin expansion
Operating margins for ACL expanded by mere 20bps yoy as against our estimate of 470bps improvement.  OPM was below our estimate on the back of a) Increase in Staff costs, which stood at 270/ton as against 208/ton yoy and b) Other overheads being higher on account of provisions made on government subsidy. Power and fuel costs were lower than our estimate as company reaped in benefits from a drop in international coal prices.

Higher depreciation and interest outgo was on account of augmentation of new capacity and change in policy pertaining to fixed asset (CPP) resulting in PAT being lower by 30% yoy.

Retain Market Performer; prices to firm up in next two months
We expect cement prices to increase further in the next two months on the back of onset of peak construction season. A revival in sentiment has resulted in a pick-up in cement demand across ACL’s key eastern, northern and western markets. We retain our market performer rating with a revised price target of Rs211.

Financial Summary
Y/e 31 Mar (Rs m) CY11 CY12E CY13E CY14E
Revenues 85,948 98,046 108,292 132,175
Yoy growth (%) 14.2 14.1 10.4 22.1
Operating profit 19,863 24,719 30,642 38,071
OPM (%) 23.1 25.2 28.3 28.8
Pre-exceptional PAT 12,448 15,751 18,692 23,880
Reported PAT 12,206 12,960 18,692 23,880
Yoy growth (%) (3.4) 6.2 44.2 27.8





EPS (Rs) 8.1 10.2 12.1 15.5
P/E (x) 24.8 19.6 16.5 12.9
Price/Book (x) 3.8 3.5 2.9 2.4
EV/EBITDA (x) 14.5 11.5 8.9 6.6
Debt/Equity (x) 0.0 0.0 0.0 0.0
RoE (%) 16.2 18.7 19.2 20.1
RoCE (%) 21.2 24.7 26.6 27.6
Source: Company, India Infoline Research
BSE 264.85 [0.50] ([0.19]%)
NSE 264.10 [1.20] ([0.45]%)

***Note: This is a NSE Chart

 

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