ICICI Securities research report on Ambuja Cements
Ambuja Cements’ (ACEM) various cost optimisation initiatives coupled with MSA synergies with ACC under Mr. Neeraj Akhoury, MD&CEO (also India head, LafargeHolcim) could achieve sustainable cost reduction (at least 15-20% of CY19 EBITDA/te, in our view) over the next few years. Commissioning of 3.1mnte clinkerisation plant at Marwa-Mundwa by H1CY21E would not only lend better volume visibility, but also improve overall profitability. With higher profitability, valuation gap vs peers may narrow.
We maintain our CY20E-CY21E EBITDA estimates (~13% ahead of consensus) with the target price unchanged at Rs255/share (10x Mar’22E EV/E). ACEM currently trades at an attractive valuation of 8.3x CY21E EV/E (for consolidated capacity of ~66mnte). Maintain BUY.
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