Neutral Ambuja Cements; target of Rs 275: Motilal Oswal
Motilal Oswal recommended Neutral rating on Ambuja Cements with a target price of Rs 275 in its research report dated February 19, 2021.
February 22, 2021 / 03:47 PM IST
Motilal Oswal's research report on Ambuja Cements
ACEM’s 4QCY20 result highlights gradual normalization of fixed costs curtailed due to the COVID-19 pandemic. Capacity constraints resulted in below industry growth in volumes at 8% YoY. Commissioning of Marwar-Mundwa capacity (in 2QCY21) should help volume grow in line with the industry at 11% CAGR over CY20-22E. We, however, maintain our Neutral rating due to weak growth visibility beyond CY22.
Valuation at 10.3x CY22E EV-to-EBITDA seems fair. We maintain our Neutral rating. We value ACEM at INR275/share, based on 10x CY22E EV-to-EBITDA, but offer a 10% holding company discount for its stake in ACC.
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