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Research
Ambuja Cements Ltd. - Q2 CY18 Result Update Rating - NEUTRAL - Arihant Capital Markets
Posted On : 2017-07-26 20:53:41( TIMEZONE : IST )
Ambuja Cements Ltd. reported 13% fall in its net profit for the quarter ended June, 2017, which came in at Rs 392 crore vs. Rs 452 crore in corresponding quarter of the previous year owing majorly to the lower other income for the quarter. Total income of the company increased by 12% to Rs 2,861 crore for quarter under review as compared to Rs 2,547 crore for the corresponding quarter of previous year.
EBITDA
EBITDA for the quarter came in at Rs 651 crore increased by 8.9% as compared to corresponding quarter of previous year. EBITDA margin contracted to 22.7% vs. 23.5% YoY.
Volumes
Cement volume for the quarter was up by 5% to 6.05 million tonnes (MT) as compared to 5.76 MT in corresponding quarter of previous year.
Future expansion plans
Recently, company won a bid, quoted at a steep 125% of the offset price, in a limestone auction at Nandgaon in Koparna taluka of Chandrapur (Maharashtra) - possibly for a brownfield expansion/meeting clinker requirement in the location.Company's balance sheet has been healthy over past, as it hasn't undertaken capacity expansion in line with industry trends over the past four-to-five years, exasperating market share losses. Recently company has taken up greenfield clinker capacity addition project of 1.7MT at Marwar Mundwa (Rajasthan). This is a part of a broader project which includes 2.2MT clinker at Marwar and 4.5MT grinding capacity spilt between 3GUs in Marwar (Raj), MP, Dadri (UP).
Valuation
Government continues to focus on housing and infrastructure development with increased allocations for road infra as well as awarding infrastructure status to affordable housing which should drive cement demand going ahead. We have valued stock on EV/EBITDA of 23(x) its CY19 estimates and have arrived at a fair value of Rs 277 per share. We have 'NEUTRAL' rating on the stock.
Shares of AMBUJA CEMENTS LTD. was last trading in BSE at Rs.265.1 as compared to the previous close of Rs. 267.5. The total number of shares traded during the day was 87824 in over 1112 trades.
The stock hit an intraday high of Rs. 267.4 and intraday low of 264.3. The net turnover during the day was Rs. 23273013.
