Ambuja Cements - Rating: Sell; Target price: Rs135 - Centrum

We expect Q4CY13 net sales to decline 11.9% YoY to Rs20.4bn. Sales volume is expected to decline 4.8% YoY to 4.9mt. Realization/tonne is expected to decline 7.4% YoY to Rs4,166/tonne.

EBITDA is expected to decline 31.9% YoY to Rs3.1bn led by fall in realization and sales volume. EBITDA margin is expected at 14.9% against 19.3% in Q4CY12. EBITDA/tonne is expected to be Rs621 against Rs868 in Q4CY12 and Rs522 in Q3CY13.

Adjusted PAT is expected to decline 22.9% YoY to Rs1.9bn. Adjusted PAT margin is expected at 9.2% against 10.5% in Q4CY12 and 7.4% in Q3CY13.

Earnings and target price revised downwards: We are reducing sales volume estimates by 2.6% for CY13E on the back of sluggish demand during the quarter. We have revised realization assumptions downwards by 1%/3.3%/3.3% for CY13E/CY14E/CY15E due to sharp fall in realization in the Western region, which is one of the key markets of the company. Considering lower realization estimates our EBITDA estimates are getting revised downwards by 9.3%/11.8%/10.4% for CY13E/CY14E/CY15E. We maintain Sell rating on the stock with a revised price target of Rs135 (earlier: Rs149), downside of 26.1% from the CMP.

Source : Equity Bulls

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