Ambuja Cements slips 7% post September quarter results

Shares of Ambuja Cements slipped 7 per cent to Rs 193 apiece on the BSE in the intra-day deals on Tuesday after the company reported 31 per cent year-on-year (YoY) growth in standalone net profit at Rs 235 crore in September quarter (Q3CY19). Net sales grew in single digit - 1.3 per cent at Rs 2,556 crore over the previous year quarter. The earnings during the quarter were in line with the analysts' estimates.

However, realisations decline of 2.3 per cent quarter-on-quarter (QoQ) was lower-than-estimated fall of 4 per cent QoQ. Cement volumes dipped 4 per cent YoY. According to the management, the demand and realisation were under pressure in western markets owing to heavy floods while Northern markets show strength.

“Higher mix of premium products, which grew 17 per cent YoY, helped Ambuja Cements to grow revenue. Revenue to grow in the coming quarters supported by launch of newer value added products. Significant progress for ongoing greenfield expansion at Marwar Mundwa in Rajasthan,” analysts at Dolat Capital said in the result update.

“Ambuja’s Greenfield plant in Marwar (1.7MTPA grinding; 3.1MTPA clinkerisation capacity) remains on track to be completed by Q3CY20. The company’s net cash balance sheet, high brand equity, 80 per cent plus capacity utilisation, investment in ACC, dominant market positioning and low valuation, makes the company a very attractive investment opportunity,” according to analysts at SBICAP Securities.

However, a relatively high cost structure ends up eroding a significant portion of the value arising from the company’s superior pricing power, the brokerage firm said in a result review note.

Prior to the results, in the past two weeks, Ambuja Cements has outperformed the market by surging 12 per cent, against a 5 per cent rise in the S&P BSE Sensex.

At 10:45 am, the stock was trading 5 per cent lower at Rs 198 on the BSE, as compared to a 0.36 per cent fall in the benchmark index. The trading volumes on the counter jumped 1.5 times with a combined 4.4 million equity shares changed hands on the BSE and NSE so far.