Result Synopsis
Ambuja Cements (ACEM) reported EBITDA beat (YSEC est. by +30%) with sequential growth of +39%, led by lower-than-expected operating cost (1% decline) Q1CY22. Reported revenue growth of +5% sequentially, aided by +5% volume growth while NSR remained flat in Q1CY22. In the last decade, ACEM's sluggish capacity expansion (~1.5% v/s ~7% CAGR industry) caused stagnant volumes growth (~2% v/s ~6% CAGR industry) that triggered the loss of market/capacity share. The management now aims for 50MTPA capacity in the near term, out of which ACEM planned the capacity expansion (3.2MTPA clinker at Chhattisgarh, 3MTPA GU at Bihar and 3.2MTPA GU at West Bengal) in the east while commissioning timelines yet to be announced. ACEM's total capacity to reach 40MTPA (+24% of current capacity), post newly announced expansion along with the ongoing 1.5MTPA expansion at Ropar, Punjab. As Ropar expansion is expected to commence by CY23E end and with the current lack of utilization headroom, we trimmed our volume growth to +8/4% y/y (previously +9/7% y/y) led revenue correction by 1/5% in CY22/23E. While, due to the elevated fuel & diesel price, we lowered our EBITDA/PAT estimate by 25/28% for CY22E and for 15/18% CY23E. The ongoing & recent announced capacity addition would outlay CAPEX of Rs38.1bn, which will be funded by internal accruals. We valued ACEM on SOTP based valuation with standalone entity valued at 14x EV/EBITDA and ACEM's stake in ACC at 10x EV/EBITDA on CY23E by adding Rs107.6bn net cash, we arrived at TP of Rs391 (earlier Rs420) with ADD rating (earlier BUY).
Result Highlights
- ACEM reported a volume of 7.5MT (+5% q/q and y/y) with healthy NSR of Rs5241/te (flat q/q and +4% y/y) took the report revenue to Rs39.25bn (+5% q/q and +8% y/y; in-line with YSEC est.) in Q1CY22.
- Report EBITDA stood at Rs7.9bn (+39% q/q and -19% y/y; beat YSEC est. Rs6bn) led by the lower-than-expected operating cost of Rs31.3bn (-1% q/q and +19% y/y; YSEC est. Rs34bn) in Q1CY22.
- Due to sequential decline in operating cost/te by 5% (Ysec est. +2% q/q) EBITDA/te improved substantially by 33% to Rs1055 (v/s YSEC est. Rs803/te) in Q1CY22. However, rise in power & fuel cost (+34% y/y) and other input cost (+48% y/y) inflated the operating cost/te by 14% y/y resulted in EBITDA/te decline by Rs307/te y/y in Q1CY22.
- PAT decline by 26% y/y but remain up by +56% q/q to Rs4.95bn (v/s YSEC Rs3.2bn) in Q1CY22.
Shares of Ambuja Cements Limited was last trading in BSE at Rs. 371.85 as compared to the previous close of Rs. 383.55. The total number of shares traded during the day was 348944 in over 8523 trades.
The stock hit an intraday high of Rs. 385.60 and intraday low of 370.55. The net turnover during the day was Rs. 132041246.00. |
