Get App

Time to reset economy

Last Updated : Oct 22, 2019 02:32 PM IST | Source:

Hold Ambuja Cement; target of Rs 190: ICICI Direct

ICICI Direct recommended hold rating on Ambuja Cement with a target price of Rs 190 in its research report dated October 22, 2019.

Broker Research @moneycontrolcom
  • bselive
  • nselive
Todays L/H

ICICI Direct's research report on Ambuja Cement

Ambuja Cement reported a disappointing set of Q3CY19 numbers on all fronts. Revenues for the quarter were broadly flat YoY at Rs 2,626 crore (below I-direct estimates of Rs 2,763 crore). Volumes fell 4.2% YoY to 5.23 MT on account of heavy rains and flooding in Maharashtra, Gujarat, Uttar Pradesh and Bihar (I-direct estimates: 5.55 MT). Realisations increased ~5% YoY to Rs 5,021/t led by improved pricing and higher sales of premium products. EBITDA margins expanded ~300 bps YoY to 16.7% (below I-direct estimates of 20.5%). While realisations grew 5% YoY, the same did not reflect in the profitability of the company due to higher power & fuel costs and other expenses. Despite these costs overrun, EBITDA/t increased 28% YoY to ~Rs 840/t, driven mainly by improvement in realisations. EBITDA increased 22.8% YoY to Rs 440 crore (below I-direct estimate of Rs 560 crore). Accordingly, PAT increased 31.3% YoY to Rs 235 crore (below I-direct estimates of Rs 369 crore). The board has also approved the merger of one of the company’s subsidiaries, Dirk India Pvt Ltd with Ambuja Cements, subject to the requisite approvals.


Ambuja Cements is debt-free. Despite having a greenfield project under way in Rajasthan, the strong liquidity supported by healthy cash flow generation would not require the company to raise any debt. However, considering the weak volume growth, we cut the target EV/EBITDA multiple marginally for Ambuja to 10x on FY21E earnings. Thus, we arrive at a target price of Rs 190 and maintain HOLD rating on Ambuja Cements.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.
First Published on Oct 22, 2019 02:32 pm
Follow us on