Ambuja Cement (ACEM) Q4CY20 revenue has increased by 12% YoY to Rs 35 billion and is led by volume increase of 8% YoY and realization increase of 4% YoY. Opex/t has declined by 1.4% on YoY, on account of lower input costs and efficiency programs with ACC, with quarterly EBITDA/t at Rs 1,095. Absolute EBITDA has increased by 30% YoY to Rs 7.7 billion. Premium product sales increased by 16% YoY in the quarter.

Commenting on the result review, the broking firm IDBI Capital said, "ACEM's Q4CY20 EBITDA was 8% higher than our estimate. Beat is driven by the volume growth of 7% YoY. Post the result we have increased volume growth expectations for ACEM (exhibit 10). This has increased EBITDA estimate by 2%/6% for CY21/22E.

We have increased EV/EBITDA valuation to value ACEM to 12x (11x earlier) and led by special dividend in CY20, net cash has reduced in SOTP based valuation. TP is revised up to Rs 269 (earlier Rs 245).

ACEM plans to increase its cement capacity by 6% and clinker capacity by 17% in CY21. And has extended MSA program with ACC for period of 3 years and is targeting reducing the cost by Rs 200/t. Stock at current level is pricing in the benefit of cost reduction and volume growth. Maintain Hold rating on the stock."

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.