Analysts bearish on Ambuja Cements on Q2, steep valuations

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26 Aug, 2025 12:21

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Analysts are bearish on Ambuja Cements after it posted disappointing April-June quarter. Its second quarter of 2015 profit after tax fell 45 percent year-on-year to Rs 226.4 crore, impacted by lower operational performance and additional depreciation charge of Rs 22 crore. Shares of the Holcim group fell 3 percent intraday on Tuesday.

Macquarie rates it underperform with a 12-month target price of Rs 184 per share. The brokerage finds valuations expensive and reasons that weak realisation has dragged Q2 2015 margins. Its  realisations fell 9.3 percent year-on-year and 6.5 percent quarter-on-quarter to Rs 4,240 per tonne. Ambuja Cements sold 5.88 million tonnes of cement during the quarter, a growth of 1.6 percent compared to 5.79 million tonnes sold in the year-ago period due to muted cement demand.

Operating profit plunged 35 percent year-on-year to Rs 383.8 crore and margin declined 630 basis points to 15.3 percent in June quarter due to weak realisations and higher freight & forwarding cost. Macquarie feels there is good chance of Ambuja reporting negative earnings per share (EPS) growth in 2015.

Goldman Sachs also maintains sell rating on the cement stock.

However, Religare has a buy rating on Ambuja with a buy rating with a target price of Rs 250 per share and continues to believe that volume growth remains the key for any meaningful revival from here on.

The brokerage is betting on the cement company as it feels that it continues to deliver better EBITDA per tonnes than its peer company ACC. "While volume growth could remain muted as the monsoon sets in, a major presence in the key north and west regions augurs well for the company’s volume and price growth over the next few years as we expect utilisation levels in these regions to touch over 90 percent," it says in a report.

At 11:08 hrs Ambuja Cements was quoting at Rs 233.75, down Rs 0.55, or 0.23 percent on the BSE.