Bottom-line up 57.9% qoq lead by strong recovery in realization
During 1QCY2011 Ambuja Cements (Ambuja) posted a 10.9% yoy growth in its net sales to `2,207 aided by growth in volumes and higher realizations. The company’s dispatches for the quarter stood at 5.64 mn tonnes up 6.8% on yoy basis. The growth in dispatches was aided by a pick-up in the demand across the country during the quarter and also due to increase in the company’s capacity. The realizations too improved by 3.8% yoy to `3,913/tone, thereby aiding the top-line growth. The realizations were higher in the quarter on account of the price hikes carried out by the cement manufacturers across the country to the tune of `30-40 per bag. On a qoq basis, the net sales were higher by a robust 23.4% on account of 10.3% improvement in realizations coupled with a 11.9% growth in dispatches. However, the OPM for the quarter was lower by 144bp yoy to 24.2%, largely on account of steep increase in the power and fuel costs. The power and fuel costs have surged on account of sharp increase in the coal costs both in the international and domestic markets. On a positive note the raw material costs were down by 44.9% yoy due to the elimination of high cost external clinker purchase. On the bottom-line front, the company’s net profit fell by 11.8% yoy to `408cr. The fall in net profit was on account of higher depreciation costs and a fall in other income. We remain neutral on the stock as we believe it is fairly priced.
Exhibit 1: 1QCY2011 Performance (Standalone)
| Y/E Dec (`cr) | 1QCY11 | 4QCY10 | % Chg qoq | 1QCY10 | % Chg yoy | CY10 | CY09 | % Chg yoy |
| Net Sales | 2,207 | 1,788 | 23.4 | 1,990 | 10.9 | 7,390 | 7,077 | 4.4 |
| Other Operating Income | 15.4 | 38.9 | (60.3) | 28.6 | (46.1) | 127.3 | 104.6 | 21.7 |
| Total Operating Income | 2222 | 1827 | 21.6 | 2019 | 10.1 | 7,518 | 7,181 | 4.7 |
| Net Raw Material Costs | 128.3 | 165 | (22.4) | 233 | (44.9) | 542 | 1,014 | (46.5) |
| (% of Sales) | 5.8 | 9.2 | 11.7 | 7.3 | 14.3 | |||
| Power & Fuel | 481.6 | 446 | 8.0 | 355 | 35.6 | 1,697 | 1,423 | 19.3 |
| (% of Sales) | 21.8 | 24.9 | 17.8 | 23.0 | 20.1 | |||
| Staff Costs | 95 | 77 | 22.1 | 77 | 22.6 | 344 | 273 | 26.0 |
| (% of Sales) | 4.3 | 4.3 | 3.9 | 4.7 | 3.9 | |||
| Freight & Forwarding | 509 | 408 | 24.7 | 412 | 23.4 | 1,610 | 1,347 | 19.5 |
| (% of Sales) | 23.0 | 22.8 | 20.7 | 21.8 | 19.0 | |||
| Other Expenses | 382.3 | 371 | 3.2 | 343 | 11.6 | 1,347 | 1,153 | 16.8 |
| (% of Sales) | 17.3 | 20.7 | 17.2 | 18.2 | 16.3 | |||
| Total Expenditure | 1,595 | 1,467 | 8.7 | 1,420 | 12.4 | 5,540 | 5,210 | 6.3 |
| Operating Profit | 627.0 | 359.9 | 74.2 | 598.7 | 4.7 | 1,977 | 1,971 | 0.3 |
| OPM | 28.2 | 19.7 | 29.7 | 26.3 | 27.5 | (115)bp | ||
| Interest | 13.8 | 21 | (33.9) | 11 | 27.9 | 49 | 22 | 117.1 |
| Depreciation | 106.1 | 109 | (2.3) | 76.7 | 38.3 | 387.2 | 297.0 | 30.4 |
| Other Income | 52.1 | 37.9 | 37.6 | 98.6 | (47.2) | 120.3 | 151.2 | (20.5) |
| PBT | 559.2 | 268.3 | 108.4 | 609.8 | (8.3) | 1,662 | 1,803 | (7.8) |
| Provision for Taxation | 151.7 | 10 | 1,383.0 | 148 | 2.8 | 398 | 585 | (31.9) |
| (% of PBT) | 27.1 | 3.8 | 24.2 | 24.0 | 32.4 | |||
| Reported PAT | 407.5 | 258.1 | 57.9 | 462.2 | (11.8) | 1,264 | 1,218 | 3.7 |
| PATM (%) | 18.5 | 14.4 | 23.2 | 17.1 | 17.2 | |||
| EPS (`) | 2.7 | 1.7 | 57.2 | 3.0 | (12.3) | 8.3 | 8.0 | 3.6 |
Source: Company, Angel Research
Exhibit 2: Per tonne analysis
| (`) | 1QCY11 | 4QCY10 | 1QCY10 | % chg (yoy) | % chg (qoq) |
| Realisation/tonne | 3,913 | 3,549 | 3,769 | 3.8 | 10.3 |
| Raw Material Cost/tonne | 228 | 328 | 441 | (48.4) | (30.6) |
| Power & Fuel Cost /tonne | 854 | 885 | 673 | 26.9 | (3.5) |
| Freight & Forwarding Cost/tonne | 902 | 809 | 781 | 15.5 | 11.4 |
| Operating Profit/tonne | 1,084 | 637 | 1,080 | 0.4 | 70.2 |
| Depreciation/tonne | 188 | 215 | 145 | 29.5 | (12.7) |
| Net Profit/tonne | 695 | 435 | 821 | (15.3) | 59.8 |
Source: Company, Angel Research
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