Author: CP

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).

ACC’s Q3CY09 results were in line with our expectations. The company’s topline rose 9% YoY to Rs 19.6bn, driven by a 6% YoY increase in realisations and a 3.1% growth in volumes.

ACC’s EBITDA margins expanded 963bps YoY to 33.9% on account of higher realisations and lower power and fuel costs. However, on QoQ basis, the company’s margins contracted 139bps. The company posted an EBITDA/tonne of Rs 1,333 during the quarter.

ACC’s capacity expansion at Bargarh is expected to add 1.1mn tonnes to its existing capacities. Moreover, the New Wadi expansion project is likely to be commissioned in phases from the third quarter until Q1FY10.

ACC’s EPS is expected to FALL in CY-2010.

GAIL’s net sales grew 0.8% YoY to Rs 62.2bn, in line with our estimate of Rs 63.9bn. During the quarter the company witnessed higher natural gas and LPG transmission volumes, a better transmission tariff, and increased gas trading revenues. However, this was largely offset by a higher subsidy burden and lower petrochemical volumes. GAIL’s subsidy share stood at Rs 4.6bn as against Rs 4bn in Q2FY09. A key positive surprise, the gas transmission tariff rose 5% QoQ to Rs 806/mscm.

The company’s EBITDA margin contracted 719bps YoY to 16.7%, below our estimate of 22.2% due to a higher-than-expected subsidy burden. This coupled with lower petrochem prices offset the benefits of higher transmission margins due to incremental volumes. However, petrochem prices have shown some improvement sequentlially, rising to Rs 69.8/kg in Q2FY10 from Rs 67.4/kg in Q1FY10.

GAIL’s adjusted PAT declined 30.3% YoY to Rs 7.1bn, below our expectation of Rs 8.7bn. However, adjusting for the subsidy burden, PAT is 4.5% above our projection due to strong other income (up 145% QoQ to Rs 1.5bn).