Ambuja Cement Q3CY17 Result Update Rating - NEUTRAL - Arihant Capital Markets

Ambuja Cements Ltd. reported 10% rise in its net profit for the quarter ended June, 2017, which came in at Rs 272 crore vs. Rs 248 crore in corresponding quarter of the previous year owing to the higher income from operations. Total income of the company increased by 15% to Rs 2,320 crore for quarter under review as compared to Rs 2,015 crore for the corresponding quarter of previous year. Top line grew strongly on account of higher sales growth and value-based pricing but company faced cost pressures on account of rising input costs on fuel, packing and other raw material.

EBITDA

EBITDA for the quarter came in at Rs 354 crore increased by 14% as compared to corresponding quarter of previous year. EBITDA margins stood steady at 15.3% compared to YoY basis. This was supported by higher realization and strong volumes, however, was offset by higher per ton cost. EBITDA per ton was Rs705 up 7% YoY.

Volumes

Cement volume for the quarter was up by 11% to 5 million tonnes (MT) as compared to 4.5 MT in corresponding quarter of previous year.

Recent developments

Ambuja Cements Ltd participated in e-auction tender 3D-1,Harima Pithasar lime stone block in Rajasthan. The company has secured an estimated limestone resource of 200 million tonnes at a price of final bid price of 41.6% of mineral value.

Valuation

The government has identified the construction and infrastructure sector as one of the key sectors that will help improve overall economic growth. Infrastructure projects in the areas of power, irrigation, roads, metros and railways, as well as dedicated freight and industrial corridors, are likely to generate strong cement demand in the country. Furthermore, increased spending on affordable and low cost housing coupled with the normal monsoon is expected to boost the rural economy which augurs well for the cement industry. We have valued stock on EV/EBITDA of 24(x) its CY19 estimates and have arrived at a fair value of Rs 289 per share. We have 'NEUTRAL' rating on the stock.

Shares of AMBUJA CEMENTS LTD. was last trading in BSE at Rs.279.2 as compared to the previous close of Rs. 276.15. The total number of shares traded during the day was 551404 in over 591 trades.

The stock hit an intraday high of Rs. 280 and intraday low of 276.7. The net turnover during the day was Rs. 153322230.

Source : Equity Bulls

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