Ambuja Cements - 3QCY2012 Result Update - Angel Broking

During 3QCY2012, Ambuja Cements (ACEM) posted a strong 77.3% yoy improvement in its bottom-line, which was in-line with our estimates. The growth in the bottom-line was on account of a healthy 18.6% yoy improvement in realization. However, volume growth remained modest at 1.4% on a yoy basis.

OPM at 24.0%, up 657bp yoy: ACEM's top-line grew by 17.9% yoy to Rs.2,168cr aided by an 18.6% yoy growth in realization. However, the volume growth was muted at 1.4% on a yoy basis. Strong realization resulted in a 657bp yoy improvement in operating margins. The company's per tonne operating cost was higher by 7.8% on a yoy basis, with raw material and freight and forwarding costs going up by 10.0% yoy and 19.0% yoy respectively.

Outlook and valuation: We expect ACEM to register a 17.6% and 26.9% CAGR in its top-line and bottom-line, respectively, over CY2011-13E. At the current market price, the stock is trading at a rich valuation of EV/tonne of US$173 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

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