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Shares of Ambuja Cements slipped 4 per cent to Rs 345.20 on the BSE in Friday’s intra-day trade after the company reported a weak operational performance for December quarter (Q4) with margin contraction of 651 bps quarter-on-quarter (QoQ), 660 bps year-on-year (YoY) to 15.2 per cent on account of higher fuel prices and flat realisations.
Earnings before interest tax and depreciation and amortization (EBITDA) declined 26 per cent YoY at Rs 568 crore impacted by unprecedented increases of fuel prices. Revenues were up 6.3 per cent YoY to Rs 3,735 crore. Profit after tax was down 36.2 per cent YoY, 28 per cent QoQ to Rs 317.4 crore mainly due to lower operating performance and exceptional charge of Rs 65.7 crore due to restructuring.
The management said the December 2021 quarter was unfavorably impacted by very steep escalation in fuel prices coupled with subdued demand in multiple regions.
Meanwhile, the company has announced clinker capacity addition of 3.2 million tons per annum (mtpa) at Bhatapara, Chhattisgarh and grinding capacity additions of 7mtpa (Sankrail and Farakka in West Bengal and Barh in Bihar). The capex for these expansions will be Rs 3,500 crore.
Despite higher cost pressure, the company failed to pass on the cost pressure as we believe the company would have resorted to volume push during Q4CY21 that eroded its margin profile further vs. our estimates, in our view, ICICI Securities said in a note.
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