Shares of Holcim group companies ACC and Ambuja Cements remained under selling pressure, declining by over 5% each in the past two trading sessions after both companies declared their results for the quarter ended March 31.
Ambuja Cements has dipped 4% to Rs 201, extending Friday’s nearly 5% decline, although the company reported higher-than-estimated profits at Rs 520 crore during the January-March quarter on account of lower-than-estimated raw material, depreciation and tax expenses and higher volumes.
However, analysts remain skeptical about the company's sustained growth in realizations and margins.
“Resumption of Binani’s 6MTPA (Million tons per annum) capacity poses threat to Ambuja Cements in terms of normalization of demand and realization,” according to Abhishek Patel, an analyst at K R Choksey Institutional Research.
Even after factoring a healthy realization and volumes growth of 5.3% and 5.0% in CY14E and 5.7% and 6.1% in CY15E, Ambuja Cements trades at 11.8x CY15E EV/EBITDA which is expensive. Moreover, the possibility of poor monsoons in CY14 due to El-Nino may impact rural demand in CY15E and remain a risk factor to watch out for, added the analyst.
ACC is also trading lower by 2% at Rs 1,286, after declining nearly 3% on Friday, as the cement maker reported an 9% year-on-year dip in consolidated net profit to Rs 399 crore in March 2014 quarter on higher input costs and lower realisations.
The company expects the cement market to remain a laggard in the near term, driven by lower government expenditure on infrastructure.
Ambuja Cements has dipped 4% to Rs 201, extending Friday’s nearly 5% decline, although the company reported higher-than-estimated profits at Rs 520 crore during the January-March quarter on account of lower-than-estimated raw material, depreciation and tax expenses and higher volumes.
However, analysts remain skeptical about the company's sustained growth in realizations and margins.
“Resumption of Binani’s 6MTPA (Million tons per annum) capacity poses threat to Ambuja Cements in terms of normalization of demand and realization,” according to Abhishek Patel, an analyst at K R Choksey Institutional Research.
Even after factoring a healthy realization and volumes growth of 5.3% and 5.0% in CY14E and 5.7% and 6.1% in CY15E, Ambuja Cements trades at 11.8x CY15E EV/EBITDA which is expensive. Moreover, the possibility of poor monsoons in CY14 due to El-Nino may impact rural demand in CY15E and remain a risk factor to watch out for, added the analyst.
ACC is also trading lower by 2% at Rs 1,286, after declining nearly 3% on Friday, as the cement maker reported an 9% year-on-year dip in consolidated net profit to Rs 399 crore in March 2014 quarter on higher input costs and lower realisations.
The company expects the cement market to remain a laggard in the near term, driven by lower government expenditure on infrastructure.
