Ambuja Cements gains 6% on strong June quarter results

The stock rallied 6% at Rs 222 on the BSE after the company reported a better-than-expected a 27% year on year growth in standalone net profit at Rs 4.99 billion in June quarter.

Shares of Ambuja Cements were trading higher by 6% at Rs 222 per share on the BSE at 09:30 am, after the company reported a better-than-expected a 27% year on year growth in standalone net profit at Rs 4.99 billion in June quarter (Q2CY18), on account of higher cement sales and lower expenses. It had profit of Rs 3.92 billion in year ago quarter.

Net sales during the quarter rose 4% to Rs 29.27 billion against Rs 28.17 billion in the corresponding quarter of previous year. Cement sales volume rose 5% to 6.37 million tonnes from 6.05 million tonnes a year earlier, Ambuja Cements said in a release.

Analysts on an average had expected profit of Rs 3.17 billion on net sales of Rs 29.72 billion for the quarter. EBITDA (earnings before interest, taxes, depreciation and amortization) margin stood at 20.6%, a 397 bps higher than consensus of 17%.

“Post the recent correction in the stock price, we believe the risk rewards are favorable and we upgrade the stock from HOLD to BUY. Holcim group Companies have shown a sharp improvement in profitability in current quarter led by cost control and better than Industry pricing. The sustainability of the current trend could re-rate the stocks and close gap of trading multiple with other large caps in the space,” analysts Antique Stock Broking said with 12 month target price of Rs 250 per share.

The stock has underperforming the market by falling 11% in past three months, as compared to 7% rise in the S&P BSE Sensex.