Ambuja Cement (ACEM) Q1CY21 Revenue / EBITDA increased by 28% / 62% YoY. Operationally, volume increased by 24% YoY with a quarterly EBITDA/t of Rs 1,362. Opex/t has declined by 4% on YoY, on account of lower input costs and efficiency programs. Absolute EBITDA has increased by 61% YoY, which is driven by higher volume and lower operating cost. ACEM reported PAT of Rs 6.6 billion up 67% YoY and 34% QoQ.

Commenting on the result review, IDBI Capital said, "ACEM Q1CY21 EBITDA came-in 13% higher than our estimate. EBITDA/t expanded to Rs 1,362/t and it was supported by lower costs and operating leverage benefit from the volume growth.

Overall, the cost saving is better than our estimate, as freight/t was lower QoQ (benefit from MSA, Paravt initiatives), employee cost is lower on QoQ and YoY basis. We have factored better than estimated result in CY21 and CY22 and increase the EBITDA by 5% pa.

Our revised TP stands at Rs 295 (earlier Rs 269), this factors EBITDA upgrade, updated market cap of ACC where ACEM holds ~51%. But ACEM at the CMP is pricing in better than estimated result. And thus, we downgrade the rating to REDUCE from HOLD. At CMP, ACEM is trading at replacement cost of USD 160/t vs ACC at USD100/t."

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