Ambuja Cements hits 52-week low, falls 11% so far in May

Shares of Ambuja Cements hit a 52-week low of Rs 222 per share, down 1%, falling 11% thus far in the month of May in otherwise firm market. The S&P BSE Sensex was up nearly 1% so far in the current month.
In past one week, the stock declined 7% after the company reported lower than expected 3% year on year (YoY) volume growth in March quarter (Q1CY18) against industry volume growth at 8% YoY.


Net sales of the company in Q1CY18 grew 9% at Rs 27.63 billion on a y-o-y basis attributable to improved realisations and sales growth of premium brands - Compocem and Roof Special. Net profit was up 10% at Rs 2.72 billion over the previous year quarter, Ambjua Cements said in a press release.

“Despite healthy industry volume growth, severe infighting among producers is keeping cement prices suppressed amid increasing costs. Standalone volume growth for Ambuja Cements is likely to be subdued in the medium term on account of nil capacity expansions till 2HCY20,” analysts at IIFL Institutional Equities said in result review with ‘reduce’ rating on the stock and target price of Rs 222.

“In Q1CY18, the company’s growth was mainly driven by healthy realisation growth while volume growth has been a laggard. However, going forward, the pick-up in road tendering activities, improved sand availability in certain key states and healthy demand from government’s low cost housing programme are expected to be key drivers of cement demand,” analysts at ICICI Securities said in result update.