The company has seen per tonne realisations at Rs 4,146, a rise 2.4 per cent year-on-year but a decline of 3.9 per cent sequentially. Better cement volumes helped revenues at Rs 2,533 crore grow 5.3 per cent year-on-year and 15.3 per cent sequentially and came in line with Bloomberg consensus estimates of Rs 2,511 crore. However, rising costs have impacted operating performance more than expected.
Ebitda came slightly lower than Rs 407 crore indicated by Bloomberg consensus estimates. Per tonne Ebitda at Rs 597 was 16.6 per cent lower on sequential basis though improved 3.2 per cent year-on-year, as per Reliance Securities. With operating performance slightly lower than expectation, net profit at Rs 246 crore also came slightly lower than Rs 254 crore estimated by Bloomberg.
Moving forward, cost controls on the back of rising costs scenario remains one of the key factors to be watched for. The trend of improving cement prices bodes well and if sustains will accrue benefits. Recent channel checks by Edelweiss shows that there is a demand push, especially in the East and some parts of North/West markets. While this is encouraging, the concern emanates from their other observation that there could be supply constraints with some markets suddenly witnessing scarce fly ash/wagon shortage as and when regulatory tightening on overloading takes effect. Fly ash sourcing has already taken a toll on profitability in March quarter too for Ambuja. Also, cost benefits from ACC's amalgamation and reducing lead distances for procuring fly ash and other raw material is yet to be seen.
The other concern remains on slow capacity addition by Ambuja Cements. Analysts at Emkay Global say that they expect volume growth of the company to remain below its peers in absence of future expansion plans. Sales volume of the company remained flat during the calender year 2012-16; also the financial year for Ambuja.Though Emkay says that the comforting factor is sustenance of higher cement prices in key regions, they arrive at a target price of Rs 228 for a stock trading at Rs 246 levels.