Ambuja Cements Posts Poor Performance in September 2013 Quarter
DSIJ Intelligence / 24 Oct 2013
The company has posted subdued numbers for the September 2013 quarter. This result is in line with its peers.
Ambuja Cements disappointed its investors with its numbers announcement for the September 2013 quarter*. The company’s topline suffered by 7% and stood at Rs 2005 crore in Q3CY13 as against Rs 2165 crore in Q3CY12, while the bottomline dipped by 45% from Rs 304 crore to Rs 166 crore on a YoY basis.
During the quarter, its overall expenses rose 5% to Rs 1875 crore due to higher employee expenses and freight costs, which surged by 13% and 4% respectively on a yearly basis. On the other hand, the raw material cost and power & fuel cost plunged by 4% and 18% respectively.
The sales volume of cement and clinker rose by 2% to 4.89 MT (million tonnes) on a YoY basis, but the realisation per tonne for Ambuja Cements moved down from Rs 4519 in Q3CY12 to Rs 4100 in Q3CY13. Its EBITDA margin declined from 24% to 13% on a yearly basis, while the EBITDA per tonne stood at Rs 522 for the said quarter. In the period, the company also commissioned a bulk packing terminal of 1 million tonne capacity at Mangalore, Karnataka.
V Srinivasan, Research Analyst-Cement, Angel Broking had this to say, “For 3QCY2013 Ambuja Cements' (Ambuja) performance was below estimates. Ambuja's standalone topline fell by 7.5% YoY to Rs 2005 crore impacted by a steep fall in realisations. While the company's volumes rose by 1.2% YoY to 4.9 million tonnes, realisations were down by a steep 8.6% YoY. The OPM fell by 1071 basis points YoY to 13.3%, impacted by a steep fall in realisations and an increase in freight costs and employee expenses. During the quarter, the company reported extraordinary income of Rs 25 crore on account of profits on the sale of residential flats. The company's adjusted PAT fell by 54% YoY to Rs 141 crore. We maintain our neutral rating on the stock."
The stock of Ambuja Cements is currently trading at Rs 194.25, with a TTM price-to-earnings ratio of 25x. The decline in infrastructure and construction activities due to an extended monsoon and a sluggish economy is the main cause for the contraction in demand for cement. Considering the overall scenario of the cement sector and the company, one should stay away from this scrip at this juncture.
*Note – Ambuja Cements follows the calendar year as its fiscal year.
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