Q1CY21 Result Update - Ambuja Cement - ICICI Direct

At 96% capacity utilisation, the company operated almost at full capacity in Q1CY21. This, along with the low base of last year led to sales volume growth of 25.7% YoY to 7.24 MT (vs. I-direct estimate: 7.32 MT). Realisations were also up 1.9% YoY to Rs. 5002/t (flat QoQ) vs. I-direct estimate of Rs. 5025/t leading to revenue growth of 28.1% YoY. Absolute EBITDA increased 61.9% YoY to Rs. 977 crore (vs. I-direct estimate: Rs. 786 crore). On QoQ basis, EBITDA/t was up Rs. 267/t to Rs. 1,349/t (up 28.8% YoY) vs. I-direct estimate: Rs. 1074/t. Key contributors to margin expansion (on QoQ basis) include 1) benefit of inventory adjustments (Rs. 161/t), improvement in logistic efficiencies aided by master supply agreement (Rs. 12/t) and other cost optimisation (Rs. 83/t) that led to overall cost reduction of Rs. 256/t on a QoQ basis. The greenfield project at Marwar Mundwa, Rajasthan (1.8 MT GU, 3 MT clinker) is expected to be commissioned by Q3CY21E. This would help improve sales volume by ~5 MT in the north and west regions. With ambition to reach 50 MT capacity in mid-term through significant de-bottlenecking opportunities, we expect the company to get back to industry leading growth trajectory once these new capacities comes on stream.

Valuation & Outlook

While short-term demand may get impacted due to Covid induced restrictions, the long-term growth trajectory of the company to remain healthy with capacity expansions backed with strong b/s. Hence, we maintain BUY rating with unchanged TP of Rs. 365 (implying a consolidated EV/t of $154 on expanded capacity and 14.5x CY22E EV/EBITDA).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_AmbujaCement_Q1CY21.pdf

Shares of AMBUJA CEMENTS LTD. was last trading in BSE at Rs.309 as compared to the previous close of Rs. 314. The total number of shares traded during the day was 673516 in over 9208 trades.

The stock hit an intraday high of Rs. 319.85 and intraday low of 306.85. The net turnover during the day was Rs. 209992423.

Source : Equity Bulls

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