Hold Ambuja Cement; target of Rs 425: Emkay Global Financial

Emkay Global Financial's research report on Ambuja Cement

The Adani Group filed an investor presentation with the stock exchanges, unveiling its roadmap for capacity expansion and cost efficiencies. Management: i) re-iterated its guidance of doubling capacity to 140mt by FY28 (16% CAGR), at a capex of Rs460bn (USD77/ton) to be funded via internal accruals; ii) stated its target of achieving consolidated EBITDA of Rs175bn, with EBITDA/ton of Rs1,470 by FY28; iii) aims for Rs300-400/ton EBITDA improvement in FY24, through operational efficiencies. The Group has also outlined a few projects totaling 24mt cement capacity expansion (vs 11mt announced earlier), aimed to be commissioned in the next 2-3 years. We are awaiting clarity on clinker capacity expansion, equipment ordering, and conversion of warrants.

Outlook

We have a HOLD rating on Ambuja Cements, with target price of Rs425/share, based on 15x FY25E EV/E.