Ambuja Cements Ltd. share price target

New capacity to accelerate growth from Q4CY21 player with capacity of over 29.7 MT spread across North-Central (40%), West (~35%) and East (~25%) in India. It has a large marketing set-up, pan-India presence...

ACEM's 3QCY21 earnings were impacted by higher costs (energy, freight, and other expense) as OPM declined by 2.2pp YoY (1.8pp below our estimates) and EBITDA/t fell 5% YoY (6% below our estimate). Its Marwar and Mudwa plant in North India has started commercial production and should aid volume growth in the near term. We largely maintain our CY21-23E EPS estimates and maintain our Neutral rating on the stock. Clarity on further growth plans will be a key factor to monitor....

Due to liquidity pressures, Industrials and Infrastructure projects are experiencing delays and possibly budget constraints given the current circumstances. Better management of commodity price risk and operational deleveraging during downturns may help the company maintain stable earnings. Given the demand uncertainty, we retain our...

We value ACL at 13.5x CY23E EV/EBITDA (including Ambuja stake in ACC with no holding company discount) to arrive at TP of Rs 450/share, implying an upside of 12% from the CMP.

The stock is currently trading at 14.7x and 12.5x CY21E and CY22E EV/EBITDA. We value ACL at 13x CY22E EV/EBITDA. However, owing to a recent run-up in prices, we change our rating from BUY to HOLD.

We initiate coverage with BUYand value the company at 13x of its CY22E EV/EBITDAto arrive at a target price of Rs.350/share(including Ambuja's stake in ACC with 10% holding company discount to our TP of ACC), implying an upside potential of 12% from the current levels.

Outlook remains challenging, considering the supply chain disruption, fluctuation in demand and raw material prices amidst second wave of COVID. Hence, we maintain our HOLD rating on the stock with a rolled forward TP of Rs. 337 based on 9x CY22E EV/EBITDA. Topline growth led by higher volume and realization In Q1CY21, consolidated revenue rose 23.4% YoY to Rs. 7,715cr on account of higher sales volume and realization. Sales volume improved 25.6% YoY to 7.24 MT aided by higher sales volume across regions. Also, realization grew 3.2% YoY to Rs. 4,945/tonne...

Ambuja Cement (ACEM) Q1CY21 EBITDA came-in 13% higher than our estimate. EBITDA/t expanded to Rs1362/t and it was supported by lower costs and operating leverage benefit from the volume growth. Overall, the cost saving is better than our estimate, as freight/t was lower QoQ (benefit from MSA, Paravt initiatives), employee cost is lower on QoQ and YoY basis. We have factored better than estimated result in CY21 and CY22 and increase the EBITDA by 5% pa. Our revised TP stands at Rs295 (earlier Rs269), this factors EBITDA upgrade, updated market cap of ACC where ACEM holds ~51%. But ACEM at the CMP is pricing in better than estimated result. And thus...

To enhance capacity to ~50 MT from current 29.7 MT The company has laid out growth plans to increase their capacity in India with the target to become a 50 MT player from current 29.7 MT. In terms of regions, the company is exploring opportunities in markets of east and west India, with brownfield expansions in Bhatpara and Maratha plants. While its upcoming facility in Marwar Mundwa, Rajasthan will enhance clinker capacity by 3 MT, it would help improve cement sales by ~5 MT. Apart from this, the company is also looking at significant debottlenecking opportunities...

Ambuja Cements (ACEM)'s 1QCY21 results highlight the company's continued focus on cost reduction, leading to 62% YoY growth in EBITDA. Volumes grew 25% YoY on the lower base of Mar'20. The commissioning of the MarwarMundwa capacity (in 3QCY21) should result in a volume CAGR of 11%, in line with the industry, over CY2023E....