Ambuja Cements - 2QCY2012 Result Update - Angel Broking

During 2QCY2012, Ambuja Cements (ACEM) posted a strong 34.9% yoy improvement in its bottom-line on account of a healthy 10% yoy improvement in realization (up 8.7% qoq). The volumes too rose by 7.4% yoy.

OPM at 28.5%, up 116bp yoy: Ambuja Cements' standalone top-line grew by 17.9% yoy to Rs.2,566cr aided by a 7.3% growth in volumes and 10.0% growth in realization. The growth in volume was on account of a healthy demand in the company's key markets in the northern region and higher capacity operation (y-o-y) by the company. Despite a strong realization growth on a y-o-y basis, the OPM rose only by a modest 116bp due to an increase in the operating costs. The company's per tonne operating cost was higher by 8% yoy with the raw material and freight & forwarding costs going up by 19.7% and 9.8% respectively on a per tonne basis.

Outlook and valuation: We expect Ambuja Cements to register a 16.5% and 22.6% CAGR in its top-line and bottom-line respectively over CY2011-13E, mainly aided by a 9.9% CAGR in volumes. At the current market price, the stock is trading at a rich valuation with an EV/tonne of US$152 on CY2013E capacity, which we believe factors in the positives of a favorable locational presence. Hence, we continue to remain Neutral on the stock.

Source : Equity Bulls

Keywords