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Realisations spike 10.3% Q-o-Q on back of price hikes across regions
Sharp price hike across regions helped Ambuja Cement (ACL) report an
impressive 10.3% Q-o-Q increase in net realizations in Q1CY11. Total volumes
jumped 12% Q-o-Q and 7% Y-o-Y. Total revenue, at INR 22.2 bn, was higher
22% Q-o-Q. Reported PAT, at INR 4.1 bn, surged 58% Q-o-Q, higher than
estimated.
Robust EBITDA/tonne of INR 1,084
With overall cost per tonne at INR 2,829 declining 3% Q-o-Q, EBITDA/tonne was
an impressive INR 1,084, up 74% Q-o-Q. With negligible clinker purchase from
external sources during the quarter, raw material cost dipped 6% Q-o-Q per
tonne. Power & fuel cost, at INR 854/tonne, declined 3.5% Q-o-Q on account of
low cost coal inventory and increased efficiencies from new plants. Factoring the
30% increase in the cost of domestic coal and 16% Q-o-Q increase in cost of
imported coal, we expect power & fuel cost at INR 1,035/tonne for CY11, up
21% from Q1CY11.
Expansion update
ACL is yet to place order for the proposed 2.2 mtpa clinkerisation project in
Rajasthan.
Outlook and valuations: Expensive; maintain ‘REDUCE’
With visible benefits of production discipline in Q4FY11, we expect companies to
be rational and estimate firm pricing environment over the next two years.
However, at CMP, the stock trades at expensive valuations of 8.9x CY12E
EV/EBITDA. We maintain ‘REDUCE’ recommendation on the stock with ‘Sector
Underperformer’ rating. We value the stock at 7.3x CY12E EV/EBITDA
(average one-year forward EV/EBITDA for past 10 years), which leads to a price
target of INR 133 per share, implying 16% downside potential.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Realisations spike 10.3% Q-o-Q on back of price hikes across regions
Sharp price hike across regions helped Ambuja Cement (ACL) report an
impressive 10.3% Q-o-Q increase in net realizations in Q1CY11. Total volumes
jumped 12% Q-o-Q and 7% Y-o-Y. Total revenue, at INR 22.2 bn, was higher
22% Q-o-Q. Reported PAT, at INR 4.1 bn, surged 58% Q-o-Q, higher than
estimated.
Robust EBITDA/tonne of INR 1,084
With overall cost per tonne at INR 2,829 declining 3% Q-o-Q, EBITDA/tonne was
an impressive INR 1,084, up 74% Q-o-Q. With negligible clinker purchase from
external sources during the quarter, raw material cost dipped 6% Q-o-Q per
tonne. Power & fuel cost, at INR 854/tonne, declined 3.5% Q-o-Q on account of
low cost coal inventory and increased efficiencies from new plants. Factoring the
30% increase in the cost of domestic coal and 16% Q-o-Q increase in cost of
imported coal, we expect power & fuel cost at INR 1,035/tonne for CY11, up
21% from Q1CY11.
Expansion update
ACL is yet to place order for the proposed 2.2 mtpa clinkerisation project in
Rajasthan.
Outlook and valuations: Expensive; maintain ‘REDUCE’
With visible benefits of production discipline in Q4FY11, we expect companies to
be rational and estimate firm pricing environment over the next two years.
However, at CMP, the stock trades at expensive valuations of 8.9x CY12E
EV/EBITDA. We maintain ‘REDUCE’ recommendation on the stock with ‘Sector
Underperformer’ rating. We value the stock at 7.3x CY12E EV/EBITDA
(average one-year forward EV/EBITDA for past 10 years), which leads to a price
target of INR 133 per share, implying 16% downside potential.
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