Prabhudas Lilladher's research report on Ambuja Cement
Ambuja Cement (ACEM) reported Q3CY21 EBITDA with 5%/3% miss on our/consensus estimates (CE). Miss was on account of higher than expected raw material and other expenses partially offset by higher realisations. Led volume expansion, EBITDA grew 3% YoY at Rs7.0bn (PLe:7.4bn). Operations show massive turnaround over last couple of years, way above our expectation. This is manifested by multifold increase in volumes under MSA, sharp acceleration in investments on waste heat recovery plants (share of renewable energy to increase by 6.6x to 38% by end of CY22) and other efficiency enhancement programs (Parvat project), aggressive volume push, new expansion plans (70% increase in capacity to 50mnt in medium term) and rejuvenated work culture.
We see strong visibility on ACEM meeting its 50mnt capacity guidance, supported by renewed focus of parent on India with the completion of integration of Lafarge-Holcim merger and strong performance by company. Reiterate BUY rating with TP of Rs445 (earlier Rs460), EV/EBITDA of 14.5x CY22e
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