>AMBUJA CEMENT LIMITED (KREDENT FINANCE)

Ambuja Ltd. declared its second quarter result today. The result came below the street expectations The sales were around 2.0% below Bloomberg consensus estimate, whereas the net profit was around 12.5% below, which was mainly on account of higher input cost

RESULT HIGHLIGHTS:
■ The net sales for the quarter ended June 09 grew by 18.16% to Rs. 1,847.41 cr, backed by higher sales volumes and better price realization

■ The average realization per bag (50kg) increased by 8.31% y-o-y to Rs. 192.44 mainly on account of price hike taken in March and April 2009 while, the volume increased by 9.09% y-o-y to 4.8 million tones

■ Though driven by benefits of prices nand higher sales volume, EBIDTA for the quarter improved by only 9.95% (it is way below the growth reported by peer companies) y-o-y to Rs. 520.77 cr while its EBIDTA margins stood at 27.58% registering a decline of 250 basis points (bps)

■ The consumption of raw material as a percentage of net sales increased by 537 bps Rs. 306.67 cr while the power and fuel cost remain the same as reported a year ago

■ Company’s interest expense declined by 8.76% y-o-y to a level of Rs. 5.21 cr while the other income declined by 21.04% y-o-y to Rs. 28.11 cr

■ Company’s Net Profit for the quarter ended June 09 cannot be compared as during the same quarter a year ago the company reported an exceptional gain of Rs. 314.19 cr

■ The company declared an interim dividend of Rs. 1.2/share

Outlook
Significant new capacity is expected to be added in the coming months, demand, led by housing, retail and infrastructure sectors is expected to remain firm. However, prices of major inputs for
the cement Industry, including coal, may rebound from recent lows because of an anticipated uptrend in the commodity business cycle. Thus, the profitability of the companies might be
impacted going forward.

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