Maintain 'reduce' on Ambuja Cements - TP Rs.132 - Geojit BNP Paribas Financial Services

- 2QCY12 EBITDA at 730 crore beat consensus estimates by 5% and recurring PAT at 470 crore was 2% less than analysts' estimates. PAT miss was due to lower other income and higher interest expenses.

- ASP for 2QCY12 at Rs.4632/ton increased 6% qoq and 10% yoy. Operating costs at Rs. 3328/ton was a little higher than market estimates.

- EBITDA/ton at Rs.1326 increased 4% qoq and higher than market estimates. Sales at 5.5 million tons were lower than market estimates.

- At the current price of Rs.180 range, the stock is traded at 40% premium to its five year average P/E of 8.1.

- EBITDA/ton expansion for Ambuja and the sector seem difficult in CY12/FY13 with the deficit monsoon, continuing oversupply situation, cost inflation and the ongoing regulatory overhang.

- Maintain 'reduce' rating with a target price of Rs.132 over one year.

- Higher than expected cement price realization and a steep decline in imported coal costs are key risks to target price estimates.

Source : Equity Bulls

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