MOSL: AMBUJA CEMENTS (Neutral)-Higher-than-estimated realizations and cost savings drive margin beat
Ambuja Cements: Higher-than-estimated realizations and cost savings drive margin beat
(ACEM IN, Mkt Cap USD6.0b, CMP INR210, TP INR231, 10% Upside, Neutral)
- Volumes in-line, realization higher than estimate: Volumes increased 5.6% YoY to 6.41mt (in-line), led by healthy growth in the IHB segment. Realizations stood at INR4,707/t (0% YoY, +2.3% QoQ; est. of INR4,632), led by better prices in east and higher proportion of premium products.
- Margins improve QoQ led by better realization and cost savings: Cost/t declined 1% QoQ (+3% YoY) to INR3,736 (est. of INR3,856). Other expenses/t declined 10% QoQ to INR740 due to lower marketing spend. Power & fuel cost/t remained flat QoQ, as the impact of higher fuel prices was mitigated by productivity improvement and a better fuel mix. Freight cost/t increased 3% QoQ due to higher diesel prices. Hence, EBITDA/t of INR971 (-9% YoY/+19% QoQ) came in higher than our estimate of INR776. EBITDA declined 4% YoY (due to a high base) but increased 23% QoQ to INR6.2b (est. of INR4.9b), translating into a margin of 20.6% (-2.18pp YoY, +2.91pp QoQ). Other income was higher because of INR1.4b in dividend received from ACC in the quarter. Tax rate was lower at 24% v/s 28.2% in 2QCY17. Hence, PAT of INR4.99b (+27% YoY) exceeded our estimate of INR3.5b.
Ambuja Cement is a holding company. Co. is engaged in the manufacture and bulk export of cement and clinker products. Through its subsidiaries, Co. is engaged in investment holding in cement industries; finance services; the manufacture of cement; and property development and construction projects.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.