Buy Ambuja Cement; target of Rs 708 Prabhudas Lilladher

Prabhudas Lilladher's research report on Ambuja Cement

Ambuja Cements (ACEM) delivered relatively strong operating performance in 2QFY25 on the back of higher volumes, higher share of premium products and green power. Cons volumes grew 8.4% YoY aided by clinker volumes from Penna and higher OPC supply in the non-trade segment. NSR declined 1.2% QoQ on fall in cement prices across regions during the quarter. Adjusting for one time other operating revenue of Rs1.4bn, EBITDA/t works out at Rs686, tad lower than PLe of Rs702/t. The management reiterated its focus on improving efficiencies on higher green power mix, captive coal, and logistical synergies. Although few of the grinding units may get delayed by few months, ACEM has enough levers to deliver strong 14% volume CAGR over FY24-27E. ACEM remains upbeat on improving demand from GoI infrastructure & housing projects across regions.

Outlook

We expect ACEM revenue/ EBITDA/ PAT to deliver CAGR of 13%/22%/19% over FY24-27E. The stock is trading at EV of 13.5x/12.3x FY26E/FY27E EBITDA. Maintain ‘Buy’ with revised TP of Rs708 (Rs756 earlier) valuing at 17x EV of Sep’26E EBITDA.

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