Ambuja Cement - Results marginally below estimates- Maintain REDUCE :Emkay

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Ambuja Cement

Results marginally below estimates- Maintain REDUCE

REDUCE

CMP: Rs133                                        Target Price: Rs140

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n     Q2CY11 EBIDTA at Rs5.8 bn (-3.4% yoy) marginally higher than est, APAT at Rs3.47 bn – marginally below due to higher tax rate. Effect of Coal price hikes visible -P&F cost increase 25% qoq. EBITDA/t at RS1101 (+1.6% qoq) slightly above est

n     Rev at Rs21.7bn in line-effect of lower volumes (-2.2% yoy) offset by higher realizations- Higher exit prices for FY11 sustained in April & pushed quarter avg realizations to Rs4108/t (v/s est of Rs4031/t)

n     Sluggish cement demand (-0.5% ytd) starts impacting cement prices- down ~Rs20/bag from Aprill-11 peaks. New mining tax could be another blow- could increase limestone & coal cost

n     Downgrade CY11/12 earnings by 5.2%/ 4.2% factoring in for lower volume growth & higher costs. Stock trades at PER of 16.8X & EV/ton of USD143 on CY11E-  Valuation leaves little upside- Maintain REDUCE TP-Rs140