Anand Rathi Securities has retained sell rating on Ambuja Cements with a target of Rs 87 in its report dated February 4, 2010.
"Ambuja Cements 4QCY09 net profit (down 1% yoy) came in below our and consensus estimates, mainly due to lower than-expected realizations and higher tax rate. We retain our Sell rating and target price of Rs 87. Revenue rose 9.7% yoy. Cement volume rose 4.8% yoy and 18% qoq to 4.8m tons. At Rs 3,705 a ton, realizations declined 7% qoq. Cement prices in Jan'10 have risen 5% from their Dec lows. We value the stock at 6.5x CY10e EBITDA. The implied target price of Rs 87 discounts CY10e earnings 11.6x and implies an EV/ton of USD 100, in line with current replacement cost, "says Anand Rathi Securities research report.
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