Arihant Capital's research report on Ambuja Cement
Ambuja Cement reported numbers which were above our estimate on all front. Revenue from operations grew by 8.4% YoY, and 5.1% QOQ to INR 3,925 cr above our estimates of INR 3729 cr. Growth in topline was backed by volume growth, better product mix and improved realization Sales volume grew by 4.2% YoY and 7.1% QoQ to 7.5 mn tonnes above our estimate of 7.1 mn tonnes. Volume growth was backed vy improving demand scenario in areas where company has major presence. Realization/ton grew by 4.1% YoY, however declined by 1.9% QoQ to INR 5,233 per tonne marginally below our expectation of INR 5,253 per tonne. Growth in realization on YoY basis was mainly supported by price hike taken across the region and increased share of value added products. We believe margin to be impacted in near term led by higher input cost, however operational efficiency through I CAN program and company’s on-going investment in WHRS will aid in mitigating cost headwinds to some extent.
Holcim group is planning to exit India business by selling stake in ACC and Ambuja. We value the stock at EV/EBIDTA of 18(x) to its CY23E to arrive at a target price of INR 456 and maintain accumulate rating on the stock.