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Ambuja Cements : Healthy volume and realization growth
Healthy volume and realization growth. In 1Q 2011, dispatches increased a healthy 13.5% qoq. Moreover
realization also increased by 8.8% qoq. consequently, revenue increased a healthy 23.4% over 4Q CY10. However,
on a yoy basis cement export declined by 31% to 89,000 tonnes. Increase in clinker sales from 18,000 tonnes last
year to 134,000 tonnes also helped in the company realizing strong revenue growth.
Variable costs were high on a yoy basis but remained steady on a qoq basis. On year-on-year basis, power
and fuel cost increased by 26.7% on account of higher clinker production and increase in coal/pet coke prices.
Freight cost was also higher by 15.3% yoy due to higher freight rates and increased internal material transfer.
However, on a qoq basis, power and fuel costs per tonne was down 4.8% because of steady coal prices. Going
forward, we expect power and fuel costs to increase since domestic coal prices increased by approximately 30% in
Mar '11.
Maintain earnings estimates and price target. We have kept our earning estimates and price target unchanged.
We maintain In-Line
Risks: Major positive risk is better-than-expected volume growth. Increased costs and weaker-than-expected
realization are the primary risks to our earning estimates.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ambuja Cements : Healthy volume and realization growth
Healthy volume and realization growth. In 1Q 2011, dispatches increased a healthy 13.5% qoq. Moreover
realization also increased by 8.8% qoq. consequently, revenue increased a healthy 23.4% over 4Q CY10. However,
on a yoy basis cement export declined by 31% to 89,000 tonnes. Increase in clinker sales from 18,000 tonnes last
year to 134,000 tonnes also helped in the company realizing strong revenue growth.
Variable costs were high on a yoy basis but remained steady on a qoq basis. On year-on-year basis, power
and fuel cost increased by 26.7% on account of higher clinker production and increase in coal/pet coke prices.
Freight cost was also higher by 15.3% yoy due to higher freight rates and increased internal material transfer.
However, on a qoq basis, power and fuel costs per tonne was down 4.8% because of steady coal prices. Going
forward, we expect power and fuel costs to increase since domestic coal prices increased by approximately 30% in
Mar '11.
Maintain earnings estimates and price target. We have kept our earning estimates and price target unchanged.
We maintain In-Line
Risks: Major positive risk is better-than-expected volume growth. Increased costs and weaker-than-expected
realization are the primary risks to our earning estimates.
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