Crisil reaffirms AAA, A1-plus ratings on Ambuja Cements

Mumbai (Maharashtra) [India], June 4 : Crisil Ratings has reaffirmed AAA/stable/A1-plus ratings on the bank facilities and short-term debt programme of Ambuja Cements.
It said the ratings continue to reflect the company's healthy market position in north and west India, robust operating efficiency and strong financial risk profile because of healthy cash flows.
These strengths are partially offset by susceptibility to the commoditised and cyclical nature of the cement industry.
However, said Crisil, any substantial debt-funded capex or acquisition which may weaken the financial risk profile will be a key rating sensitivity factor.
For the three months ending March, the standalone sales volume increased around 26 per cent year-on-year driven by healthy demand and low base, which was impacted because of the lockdown in last two weeks of March last year.
During first quarter of 2021 (January to March), EBITDA margin improved to 27.3 per cent from 21.9 per cent in the corresponding quarter of previous year driven by strong growth in volumes and efficiency gains.
The agency believes Ambuja Cements will maintain its strong financial risk profile over the medium term supported by healthy cash accrual and low debt. The company has installed capacity of 29.65 million tonnes per annum.
Crisil Ratings combined the business and financial risk profiles of Ambuja Cements and ACC Ltd. This is because after the restructuring, ACC became a subsidiary of Ambuja Cements.
Moreover, both companies have a common line of business and entered into master supply agreement which helps them operate symbiotically, optimising each other's plant capacities and spare inventories, and thus benefit from operational and financial synergies.