Hold Ambuja Cements; target of Rs 415: Emkay Global Financial

Emkay Global Financial recommended hold rating on Ambuja Cements with a target price of Rs 415 in its research report dated May 03, 2023.

Broker Research

May 03, 2023 / 15:45 IST

hold

Emkay Global Financial's research report on Ambuja Cements

For standalone Jan-Mar 2023 quarter (Q5FY23), Ambuja Cement’s (Ambuja) EBITDA stood flat YoY and increased 23% QoQ to Rs7.9bn, in-line with our estimates. EBITDA/ton declined 8% YoY and increased 18% QoQ to Rs977 (Emkay Est.: Rs990). Management has reiterated its key focus areas: i) doubling of capacity from ~68mt to 140mt in five years; ii) Rs300-400/ton improvement in FY24 EBITDA by optimizing manufacturing and logistics cost; and iii) enhancing sales and marketing initiatives to improve the topline. The group is looking to set up 40mt clinker capacity (likely 10 lines of 4mt each); equipment ordering is in advanced stage and is likely to be announced soon in a phased manner, as per management. Consolidated net cash increased Rs1.7bn YoY/Rs21bn QoQ to Rs115bn as of Mar-23.

Outlook

We have broadly maintained our FY24-25 EBITDA estimates. However, factoring in the reduction in ACC’s TP, we have revised our Mar-24 TP for Ambuja to Rs415/share (earlier Rs425), based on 15x EV/E.

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