Ambuja Cements - Efficiency gain of ACC is in interest of Ambuja - PhillipCapital

Ambuja Cements (Ambuja) reported marginally lower than expected operating numbers in Q3CY13 (with our estimates), though the numbers were way below consensus. Net sales were low by 8%YoY; 15% QoQ; EBITDA at Rs2.55bn (-50% YoY; -48% QoQ) with EBITDA margin of 12.7% (23.8%YoY; 21% QoQ); EBITDA/tonne at Rs522 (-51% YoY; -43% QoQ); PAT at Rs1.41bn (-57% YoY; -54% QoQ). Though volume growth at 2.1% YoY was a positive surprise, the growth was lower than its Sister Concern ACC Ltd. (ACC). Also, realisation/tonne loss of Ambuja was much higher than Peers at 9% YoY; 6% QoQ. With proposed restructuring of shareholding pattern of Holcim'sIndian subsidiaries, we believe, ACC will tend to gain more than Ambuja on operational efficiency front, which is likely to bridge the valuation gap between the two companies. On our estimatesAmbuja still trades at a 25% premium to ACC on EV/tonne (1 year forward). We expect stock valuations of Ambuja to remain in range-bound parameters. We maintain our Neutral stand on the stock with a price target of Rs180/-.

Source : Equity Bulls

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