Last Updated : Oct 22, 2019 11:12 AM IST | Source: Moneycontrol.com
Ambuja Cements reported a 31.3 percent jump in its September quarter standalone net profit to Rs 234.6 crore aided by an improved margin and operating income.
The September quarter numbers of Ambuja Cements seems to have failed to impress the market as the stock fell over 7 percent on BSE on October 22.
On October 18, Ambuja Cements reported a 31.3 percent jump in its September quarter standalone net profit to Rs 234.6 crore aided by an improved margin and operating income.
Some brokerages said the numbers failed to meet Street expectations.
“Ambuja Cements’ Q3CY19 EBITDA was below our and consensus estimates led by higher costs and weaker volumes. The company lost market share with a 4 percent year-on-year (YoY) decline in volumes led by weather-related disruptions in West,” said Kotak Securities.
As per Kotak securities, costs were higher than expected due to the usage of high-cost coal inventory and higher other expenses. The brokerage expects pet coke cost benefits in the coming quarters but said weak prices may keep margins range-bound.
“We revise our fair value to Rs 200 (Rs196 earlier) as we roll forward to September 2021E at an unchanged 9 times EV/EBITDA and maintain reduce,” Kotak said.
Brokerage firm Arihant Capital has a ‘hold’ call on the stock with an unchanged target price of Rs 223.
“Ambuja Cement reported a muted set of numbers in Q3CY19, mostly missing our estimate except on revenue front. We are bullish on cement Sector from a medium-term perspective, however, due to expensive valuation of Ambuja, we feel near term upside will be capped. Hence we recommend a hold rating on the stock with a target price of Rs 223,” Arihant Capital said.
On the other hand, Reliance Securities has a ‘buy’ recommendation on the stock with a target price of Rs 233.
“Looking ahead, likely commissioning of clinker unit in 2021 will be a catalyst for the stock, which will ease the concern over capacity constraint. Further, the absence of incentives for its Maharashtra unit from Apr’20 will impact its profitability, which is expected to be recovered with likely pick-up in realisation and cost savings initiatives. The company’s decision to amalgamate its WOS, ‘Dirk India Pvt. Ltd.’ is a cost-saving initiative during the quarter,” said Reliance Securities.
Shares of Ambuja Cements traded 4.41 percent down at Rs 198.50 on BSE around 1055 hours.
First Published on Oct 22, 2019 11:12 am