Ambuja Cements – Poor Performance

Ambuja’s poor performance continued with profits missing our estimates by 15% on higher clinker purchases and high coal costs. ACEM’s 3Q09 PAT grew 27% YoY on account of one-offs.

Domestic volumes increased 9.1% YoY while exports declined 50% YoY. The average realisation improved 10.5% YoY and 1.6% QoQ on account of a lower proportion of exports and higher realisations in the North and East.

Costs in 3Q09 surprised negatively. Ambuja is short of clinker capacity in the East and had to purchase clinker from the market given the strong demand in the region. Coal cost per tonne was flat sequentially, as the high-cost coal inventory was fully
consumed in the quarter.

Ambuja’s EPs is expected to drop for 12-2010 to Rs 7.79 from Rs 8.25 this year (12-2009).