Prabhudas Lilladher recommended accumulate rating on Ambuja Cement with a target price of Rs 260 in its research report dated May 07, 2018.
Prabhudas Lilladher's research report on Ambuja Cement
Ambuja cement (ACEM) reported Q1CY18 earnings below our estimates. Numbers further look disappointing in the context of better performance delivered by its peers on both the realisations and cost front. In backdrop of weak outlook on trade demand and pressure on realisations (due to intense competition and rising pace of capacity addition), we cut our earnings estimates by 10%/10% for CY18e/CY19e. Given the serious underperformance and leaner valuations, we maintain Accumulate rating with TP of Rs260 (earlier Rs290); EV/EBITDA of 15x CY19E.
We trimmed our realisation estimates by 3%/6% for CY18e/CY19e as we expect the pressure on prices in North and Eastern region to persist due to continuous capacity addition and weaker trade demand. Hence, our estimates for EBITDA/t stand revised downward by 16%/11% to Rs700/Rs840 for CY18e/CY19e.
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