24 July 2014
2QCY14 Results Update | Sector:
Cement
Ambuja Cements
BSE SENSEX
26,272
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
S&P CNX
7,831
ACEM IN
1,548.0
244/148
-5/9/-17
Financials & Valuation (INR Billion)
Y/E Dec
Sales
EBITDA
NP
Adj. EPS
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA
31.5
2.4
13.0
22.8
2.2
9.1
16.9
2.1
5.9
2014E 2015E 2016E
102.8 120.9 141.2
19.8
13.7
6.9
2.4
92.7
9.8
14.3
65.0
27.7
18.9
9.6
37.9
10.1
14.8
52.6
36.5
25.6
12.9
35.2
12.8
18.6
43.2
CMP: INR218
TP: INR235
Neutral
M.Cap. (INR b) / (USD b) 337.9/5.6
97.2 104.6
Volume growth and realizations beat estimates:
ACEM’s 2QCY14 net sales grew
by 15.4% YoY (+3% QoQ) to INR27.1b (v/s est of INR25.1b). Both dispatch volume
and realizations surprised positively. Cement volume stood at 5.84mt (v/s est
5.6mt), +7.1% YoY (-4% QoQ), and realizations of INR4,631/ton (v/s est of
INR4,456/ton), +6.4% QoQ (+7.8%YoY).
EBITDA/ton at INR982 (7% beat), despite cost push:
EBITDA grew 17% YoY (flat
QoQ) to ~INR5.7b (v/s est ~IN5.2b), translating into margin of 21.2% (+0.6pp
QoQ). EBITDA/ton stood at ~INR982 (v/s est ~INR920), up INR81/ton YoY
(+INR33/ton QoQ). Cost push negatively surprised with 7.2% QoQ increase driven
by (1) higher freight cost, (2) higher other expenses (ad expense and repair cost
led )and (3) higher employee costs. As a result, PAT stood at INR4.1b (v/s est of
INR3.8b), a growth of ~26% YoY. (-9% QOQ). Board has approved payment of
interim dividend of INR1.8/share.
Capacity addition at Marwa Mundwa deferred:
ACEM is yet to commence work
for capacity addition of 4.5mt at Marwa Mundwa, Rajasthan. It would finalize
timeline, as it gets more clarity on scheme of global merger between Holcim and
Lafarge and its implication in India.
Outlook:
Although macro-economic condition remains challenging, construction
activity is expected to pick up pace considering favorable announcement in the
Union Budget for infrastructure & housing.
Revising estimates, maintain Neutral:
We are revising EPS for CY14/CY15 by -
0.5%/+6% to INR6.9/9.6 respectively, to factor in for (1) higher volume growth at
5.5%/8% for CY14/15 (v/s 3.5%/6%), (2) increasing realizations by INR75/ton to
factor in for 2QCY14 beat, and (3) higher tax. ACEM trades at an 9.1x CY15E
EV/EBITDA and USD141/ton (on fully diluted equity and excluding synergies).
Maintain
Neutral
with target price of INR235 (at ~USD160/ton).
(INR Million)
Quarterly Performance
Y/E December
Sa l es Vol ume (m ton)*
YoY Cha nge (%)
Rea l i za ti on (INR/ton)
YoY Cha nge (%)
QoQ Cha nge (%)
Net Sales
YoY Cha nge (%)
EBITDA
Ma rgi ns (%)
Depreci a ti on
Interes t
Other Income
PBT before EO Item
Extra ordi na ry Inc/(Exp)
PBT after EO Exp/(Inc)
Ta x
Ra te (%)
Reported Profit
Adj PAT
YoY Cha nge (%)
1Q
5.96
-3.6
4,271
0.3
-0.5
25,448
-3.3
5,118
20.1
1,204
132
1,339
5,121
1,741
6,862
1,983
28.9
4,879
3,641
-28.3
CY13
2Q
3Q
4Q
5.46
4.89
5.29
-3.1
2.0
-1.8
4,297 4,103 4,142
-5.7
-9.2
-3.5
0.6
-4.5
0.9
23,457 20,049 21,913
-8.6
-7.4
-5.3
4,920 2,554 2,890
21.0
12.7
13.2
1,223 1,246 1,228
171
178
169
1,051
940 1,019
4,578 2,070 2,512
0
481 1,046
4,578 2,551 3,558
1,336
891
393
29.2
34.9
11.0
3,242 1,660 3,165
3,242 1,346 2,234
-30.9
-60.1
-2.8
1Q
6.06
1.7
4,352
1.9
5.1
26,378
3.7
5,757
21.8
1,197
161
1,434
5,832
948
6,780
1,579
23.3
5,200
4,473
22.9
CY14
2Q
3QE
4QE
5.84
5.18
5.70
7.1
6.0
7.8
4,631 4,431 4,631
7.8
8.0
11.8
6.4
-4.3
4.5
27,064 22,949 26,414
15.4
14.5
20.5
5,741 3,391 4,953
21.2
14.8
18.8
1,242 1,275 1,308
203
200
188
1,518 1,100 1,198
5,815 3,016 4,655
0
0
0
5,815 3,016 4,655
1,728
890 1,403
29.7
29.5
30.1
4,087 2,126 3,252
4,087 2,126 3,252
26.1
57.9
45.5
CY13
21.60
-1.8
4,207
-4.4
90,868
46.1
15,482
17.0
4,901
651
4,349
14,280
3,269
17,549
4,603
26.2
12,946
10,464
-32.2
CY14E
22.79
5.5
4,511
7.2
102,805
45.3
19,841
19.3
5,022
752
5,250
19,317
948
20,265
5,600
27.6
14,665
13,717
31.1
Est.
2QE
5.6
3.0
4,456
3.7
1.8
25,053
6.8
5,172
20.6
1,225
160
1,175
4,962
0
4,962
1,191
24.0
3,771
3,771
16.3
Var.
(%)
3.9
135.1
4
110.6
250.4
8
126.0
11
2.7
1
27
29
17
17
45
23.8
8
8
59.6
Jinesh Gandhi
(Jinesh@MotilalOswal.com); +91 22 3982 5416
Sandipan Pal
(Sandipan.Pal@MotilalOswal.com); +91 22 3982 5436
Investors are advised to refer through disclosures made at the end of the Research Report.