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Ambuja Cements Net Income dropped on 45.7% in 2015 and EBITDA Margin decreased on 3.0 pp from 19.4% to 16.4%

10-02-2016 • About Ambuja Cements ($AMBUJACEM) • By InTwits

Ambuja Cements reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Ambuja Cements is a company in decline: FY2015 revenue growth was -5.5%, 5 years revenue CAGR was -3.2%
  • Ambuja Cements has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.7%. At the same time it's in pair with industry average of 25.8%.
  • CAPEX is quite volatile: 29,987 in FY2015, 28,520 in FY2014, 17,867 in FY2013, 9,260 in FY2012, 9,518 in FY2011
  • The company has business model with low profitability: ROIC is at 8.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Ambuja Cements ($AMBUJACEM) key annual financial indicators

mln. INR201120122013201420152015/2014
P&L
Revenue85,21097,39591,09999,30593,880-5.5%
EBITDA19,97124,89416,58719,28315,423-20.0%
Net Income12,27712,93212,78614,8658,079-45.7%
Balance Sheet
Cash20,13821,99521,57722,71527,93223.0%
Short Term Debt17921014924115373.1%
Long Term Debt507393334316236-25.5%
Cash flow
Capex6,5756,9907,7298,2456,237-24.4%
Ratios
Revenue growth-23.0%14.3%-6.5%9.0%-5.5%
EBITDA growth2.5%24.7%-33.4%16.3%-20.0%
EBITDA Margin23.4%25.6%18.2%19.4%16.4%-3.0%
Net Income Margin14.4%13.3%14.0%15.0%8.6%-6.4%
CAPEX, % of revenue7.7%7.2%8.5%8.3%6.6%-1.7%
ROIC17.0%19.4%11.2%13.0%8.0%-5.0%
ROE16.0%15.3%14.0%15.2%7.9%-7.3%
Net Debt/EBITDA-1.0x-0.9x-1.3x-1.2x-1.8x-0.6x

Revenue and profitability


The company's Revenue decreased on 5.5% in FY2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 3.0 pp from 19.4% to 16.4% in FY2015.

Net Income marign decreased on 6.4 pp from 15.0% to 8.6% in FY2015.

Capital expenditures (CAPEX) and working capital investments


In FY2015 Ambuja Cements had CAPEX/Revenue of 6.6%. Ambuja Cements's CAPEX/Revenue decreased slightly on 0.53 pp from 7.2% in FY2012 to 6.6% in FY2015. It's average level of CAPEX/Revenue for the last three years was 7.8%.

Return on investment


The company operates at low ROIC (7.98%) and ROE (7.94%). ROIC decreased on 5.0 pp from 13.0% to 8.0% in FY2015. ROE decreased on 7.3 pp from 15.2% to 7.9% in FY2015.

Leverage (Debt)


Company's Net Debt / EBITDA is -1.8x and Debt / EBITDA is 0.0x. Net Debt / EBITDA dropped on 0.6x from -1.2x to -1.8x in FY2015. Debt increased on 2.9% in FY2015 while cash surged on 23.0% in FY2015.

Management team


The company's CEO Ajay Kapur has spent 6 years at the company. Ambuja Cements's CFO Suresh Joshi has spent 2 years at the company.

Appendix 1: Peers in Cement & Cement Products


Below we provide Ambuja Cements benchmarking against other companies in Cement & Cement Products industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Ncl Industries ($NCLIND)38.2%-15.8%-3.0%30.8%
Indian Hume Pipe Co ($INDIANHUME)-20.3%34.5%18.3%22.7%
J.K.Cement ($JKCEMENT)21.8%14.7%-4.0%21.2%
Visaka Industries ($VIKASAS)14.7%22.0%-2.6%13.6%
Prism Cement ($PRISMCEM)33.2%4.9%5.3%12.5%
 
Median (15 companies)14.9%11.7%-1.4%6.4%
Ambuja Cements ($AMBUJACEM)14.3%-6.5%9.0%-5.5%


Top companies by EBITDA margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Saurashtra Cement ($SAURASHCEM)9.7%11.4%21.6%11.9%16.8%
India Cements ($INDIACEM)13.3%20.6%18.4%12.4%15.1%
Deccan Cements ($DECCANCE)19.2%22.8%13.2%14.7%14.9%
Acc ($ACC)19.2%19.3%14.6%12.9%14.4%
J.K.Cement ($JKCEMENT)13.3%20.3%19.2%12.7%13.4%
 
Median (14 companies)13.3%16.2%13.2%10.6%10.4%
Ambuja Cements ($AMBUJACEM)23.4%25.6%18.2%19.4%16.4%


Top companies by CAPEX/Revenue, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Udaipur Cement Works ($UDAICEMENT)91.1%
J.K.Cement ($JKCEMENT)14.1%6.5%18.8%55.8%16.2%
Acc ($ACC)4.8%5.0%8.6%13.7%9.5%
Birla Corporation ($BIRLACORPN)23.2%19.1%7.1%5.5%6.9%
K.C.P ($KCP)28.2%8.6%9.9%12.6%5.2%
 
Median (11 companies)9.0%5.5%7.1%5.5%5.1%
Ambuja Cements ($AMBUJACEM)7.7%7.2%8.5%8.3%6.6%


Top companies by ROIC, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Saurashtra Cement ($SAURASHCEM)4.3%38.6%42.7%13.9%26.9%
Indian Hume Pipe Co ($INDIANHUME)15.5%7.6%13.8%15.0%18.0%
Acc ($ACC)18.5%20.2%12.7%11.0%9.9%
K.C.P ($KCP)14.9%17.6%6.7%7.1%9.3%
Deccan Cements ($DECCANCE)7.6%17.4%8.0%6.4%9.1%
 
Median (16 companies)7.6%13.7%8.2%6.4%8.3%
Ambuja Cements ($AMBUJACEM)17.0%19.4%11.2%13.0%8.0%


Top companies by Net Debt / EBITDA

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Udaipur Cement Works ($UDAICEMENT)17.1x
Heidelbergcement India ($HEIDELBERG)11.2x14.0x12.2x0.0x10.4x
Prism Cement ($PRISMCEM)3.4x4.8x6.0x10.0x6.0x
J.K.Cement ($JKCEMENT)4.5x2.3x2.3x6.9x5.8x
India Cements ($INDIACEM)4.8x3.2x3.5x5.5x4.6x
 
Median (13 companies)2.9x2.1x2.9x3.2x2.7x
Ambuja Cements ($AMBUJACEM)-1.0x-0.9x-1.3x-1.2x-1.8x


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