>Ambuja Cements (IDFC SSKI)

Broadly in line with estimates; CY09 earnings upgraded by 8% on recent cement price hikes....

HIGHLIGHTS OF Q1CY09 RESULTS

• ACL reported Q1CY09 net sales at Rs18.5bn, marginally ahead of estimates of Rs18.2bn. Total volumes saw a 6.3% yoy increase to 5.1mn tons, led mainly by a 44% yoy jump in exports to 0.28mn tons, as domestic dispatches grew by 4.7% to 4.82mn tons. ACL’s overall volume growth during the quarter trailed the industry average of 9.5% as the company operated most of its plants at higher than full utilization and no major new capacities were added in the last 12 months.

• Net realizations increased by in line with estimates, by 5.5% yoy and Rs110/ton q-o-q to Rs3,638/ton. Growth in realizations was driven by price hikes across the country during the quarter – especially in ACL’s key markets in the north and west.

• Raw material costs increased by 13.6% yoy to Rs379/ton, due to higher clinker purchases during the quarter. ACL has commissioned grinding units ahead of corresponding clinker capacities, which necessitated higher clinker purchases, with purchased clinker costs moving up by 22% yoy during the quarter. We do not expect raw material costs to soften in the medium term, since the company’s expanded clinker capacities are likely to be commissioned
in phases starting H1CY09 and up to Q1CY10.

• Power and fuel costs, although lower by 11.3% on a q-o-q basis, were still higher by 30.9% yoy at Rs782/ton, as ACL did not benefit from the sharp fall in imported coal prices, due to relatively higher inventory levels.

• With the higher raw material and power and fuel costs offsetting the increased realizations, EBITDA increased by a muted 2% yoy to Rs5.25bn, marginally ahead of estimates of Rs5.08bn. EBITDA margins fell by 270bps yoy to 28.4%.

• Overall, ACL’s PAT remained flat on a yoy basis at Rs3.34bn, broadly in line with estimates of Rs3.23bn.

To see full reports: AMBUJA