Buy Ambuja Cement; target of Rs 280: ICICI Direct

ICICI Direct's research report on Ambuja Cement

Ambuja’s results were above our expectation mainly due to higher than-expected topline. The beat on the topline front was led by 2.7% YoY increase in volumes to 6.0 MT, which came in as a positive surprise against 12% YoY decline in pan-India production volumes in Q1CY17 as per core industry data.

Outlook

Hence, we continue to maintain our BUY rating with a target price of Rs 280 share (i.e. valuing Ambuja’s business at 16.0x CY18E EV/EBITDA and valuing stake in ACC at a discount of 10% on fair value that works out to implied valuation of $185 EV/tonne on combined adjusted capacity).

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