MOSL: AMBUJA CEMENTS (Buy)-Sharp pricing improvement drives multi-year-high EBITDA/t
​​Ambuja Cements: Sharp pricing improvement drives multi-year-high EBITDA/t
(ACEM IN, Mkt Cap USD8.3b, CMP INR268, TP INR308, 15% Upside, Buy)
- Moderate volume growth: 2QCY17 standalone revenue of INR28.23b (+12% YoY) came in only marginally below our estimate of INR28.49b, led by strong realization improvement to INR4,651 (+7.6% YoY, +10.5% QoQ; largely in line with est. of INR4,663) on sharp price increases in the western market (~38% of ACEM volumes). Volumes increased 3.8% YoY, led by healthy growth in the east and north markets.
- Healthy pricing drives multi-quarter-high EBITDA/t: EBITDA increased 6% YoY to INR6.13b, translating into margin of 21.7% (+7.3pp QoQ, -1pp QoQ). EBITDA/ton increased 2% YoY to INR1,010 (+INR404/t QoQ) due to a sharp increase in pricing. Other income declined 51% YoY due to receipt of ACC's dividend in 2QCY16. Hence, PBT declined 8% YoY to INR5.47b. PAT fell 13% YoY to INR3.92b due to higher tax rate of 28%.
- Unitary cost higher by 9% YoY: Unitary cost rose 9% YoY to INR3,641/tonne in 2QCY17, led by 8%/16% increase in freight/power & fuel cost. P&F cost/t rose 4% QoQ due to higher petcoke prices.
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.
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