Angel Broking recommends Neutral on Ambuja Cements - 4QCY2013 Result Update

For 4QCY2013, Ambuja Cements (ACEM) posted a weak performance on the operational front due to a 3.5% yoy fall in realization. Volume too declined by 1.9% yoy. The EBITDA fell by 31.6% on a yoy basis, with the EBITDA/tonne at Rs. 586, down by 30.3% on a yoy basis.

OPM down 541bp yoy: For 4QCY2013 ACEM's performance was below estimates. Its standalone top-line fell by 5.3% yoy to Rs. 2,191cr impacted by a steep fall in realization. While the company's volume fell by 1.9% yoy to 5.25mn tonne, realization was down by 3.5% yoy. The OPM fell by 541bp yoy to 14.0%, impacted by a fall in realization and increase in freight costs and employee expenses. The reported PAT rose by 49% yoy to Rs. 317cr, aided by tax write back of Rs. 100cr. Adjusted for the same, the bottom-line stood at Rs. 217cr up 2.4% on a yoy basis.

Outlook and valuation: We expect ACEM to register a 1.6% CAGR in top-line over CY2012-14E. However, the bottom-line is expected to de-grow at a CAGR of 9.7% for the same period due to high cost pressures and poor pricing scenario. At the current market price, the stock is trading at an EV/tonne of US$109 on CY2014E capacity, which we believe is fair. Hence, we continue to remain Neutral on the stock.

Source : Equity Bulls

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