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Ambuja Cements (ABUJ.BO): Maintain Neutral
Sustained industry-leading volume growth: We expect a 11% volume growth by Ambuja
in CY11E, as newly commissioned capacity ramps up, implying an 81% utilisation rate.
Better exposure: With no exposure to the vulnerable South region, Ambuja has a superior
regional mix compared with peers. With about 60% exposure to East and West, it has
better pricing power than peers.
Maintain superior profitability: We expect Ambuja to continue to deliver superior
profitability compared with peers, with CY11E EBITDA /T of about Rs1,000 (compared with
Rs975 for CY10). This will be driven by its sustained cost efficiency.
Maintain Neutral on reasonable valuations: We revise our CY11E-CY13E EPS by +1% to
+10% on revised volume and pricing assumptions. At 138% EV/RC, valuations appear
reasonable, in line with 10-yr historical mean. We revise our 12-m EV/RC-based TP to Rs132
(from Rs103) on higher replacement cost.
Key risks: upside: sustained strength in pricing, parent (Holcim) continuing to raise its
stake; downside: higher coal costs and lower-than-expected increase in volumes.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ambuja Cements (ABUJ.BO): Maintain Neutral
Sustained industry-leading volume growth: We expect a 11% volume growth by Ambuja
in CY11E, as newly commissioned capacity ramps up, implying an 81% utilisation rate.
Better exposure: With no exposure to the vulnerable South region, Ambuja has a superior
regional mix compared with peers. With about 60% exposure to East and West, it has
better pricing power than peers.
Maintain superior profitability: We expect Ambuja to continue to deliver superior
profitability compared with peers, with CY11E EBITDA /T of about Rs1,000 (compared with
Rs975 for CY10). This will be driven by its sustained cost efficiency.
Maintain Neutral on reasonable valuations: We revise our CY11E-CY13E EPS by +1% to
+10% on revised volume and pricing assumptions. At 138% EV/RC, valuations appear
reasonable, in line with 10-yr historical mean. We revise our 12-m EV/RC-based TP to Rs132
(from Rs103) on higher replacement cost.
Key risks: upside: sustained strength in pricing, parent (Holcim) continuing to raise its
stake; downside: higher coal costs and lower-than-expected increase in volumes.
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