Ambuja Cements share price declines as brokerages cut target price after Q4 earnings

Ambuja Cements share price fell in early trade on February 21 after various  brokerages cut the target price following its fourth-quarter numbers.

Ambuja Cements on February 17 reported a decline of 55.48 percent in its consolidated net profit to Rs 430.97 crore for the quarter ended December. The company, which follows the January-December financial year, had clocked a net profit of Rs 968.24 crore a year ago, it said in a BSE filing.

However, revenue from operations during October-December 2021 jumped 2.31 percent to Rs 7,625.28 crore from Rs 7,452.87 crore a year ago. Total expenses stood at Rs 6,865.61 crore, a 6.7 percent jump from Rs 6,434.43 crore a year ago.

The company's board recommended a final dividend of Rs 6.30 per share subject to the approval of shareholders.

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Here is what brokerages have to say about the stock and the company after December quarter earnings:

Citi

The broking house has downgraded the stock to 'neutral' and cut the target price to Rs 365 from Rs 435.

The east may account for 35 percent of capacity, taking away geographic advantage versus ACC.

At an EV/t of $140, prefer ACC at $110/t EV.

CLSA

The brokerage firm has maintained 'outperform' rating and cut the target to Rs 390 from Rs 440.

The east expansion is unexciting and Q4 earnings below expectation on high power costs.

Jefferies

The research firm has maintained the 'buy' call and cut the target price to Rs 425 from Rs 470.

The volume outperformance negated by higher cost spike and reported a higher fall in EBITDA despite a 2 percent on-year volume growth.

Jefferies has cut CY22-23 EBITDA estimate by 11-13 percent to reflect cost increases.

Prabhudas Lilladher

"Ambuja Cement (ACEM) reported weak Q4CY21 earnings. EBITDA fell 26 percent YoY to Rs 5.7 billion, below our/consensus estimates by 16 percent/20 percent. Miss was on account of higher than expected energy cost and other expenses," it said.

ACEM delivered material turnaround in earnings over last couple of years. This is manifested by multifold increase in volumes under MSA, acceleration in investments on waste heat recovery plants (share of renewable energy to increase by 6.6x to 38 percent by the end of CY22) and new expansion plans (60 percent increase in capacity to 50mnt in medium term).

These constructive changes shall translate in meaningful improvement in margins and volume growth in the coming years.

"Given the better visibility on volume growth and improved margins trajectory, we maintain 'buy' rating with revised target price of Rs 390 (earlier Rs 440), EV/EBITDA of 13.5x CY23e," the brokerage house said.

At 9:17am, Ambuja Cements was quoting at Rs 336.70, down Rs 1.60, or 0.47 percent, on the BSE.

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