Ambuja Cements Q3 Results Review - Higher Cost Led Earnings Miss; Consolidated Volume Up 3% YoY: Motilal Oswal

Motilal Oswal Report

Ambuja Cements ltd.'s (standalone) Ebitda came in at Rs 8.5 billion versus our estimate of Rs 9.6 billion, due to higher-than-estimated opex/tonne (plus 5% versus our estimate). Ebitda/tonne came in at Rs 1,038 (estimate Rs 1,203) and operating profit margin stood at 19% (versus estimate 22.5%).

Profit after tax stood at Rs 5.1 billion (20% below our estimate). Consolidated sales volume grew 3% YoY and Ebitda/tonne increased ~65% YoY/24% QoQ to Rs 1,228.

The management highlighted that ~12% of clinker capacities were under maintenance, leading to higher costs. The company’s cement capacity has increased to 77.4 million tonnes per annum and another ~32 mtpa expansion is underway at various stages. This expansion will help the company reach 110 mtpa capacity by FY27.

We cut our FY24 earning per share estimates by 5%, due to earnings miss, while maintaining estimates for FY25-26.

Ambuja Cements trades at 20.1 times/17.6 times FY25E/FY26E enterprise value/Ebitda (standalone).

We maintain our Neutral rating on the stock.

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