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

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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.

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Ambuja Cement - 28 -03 - 2023 - emkay