Ambuja Cement Q3 Results Review - Weak Numbers, 'Sell': IDBI Capital

IDBI Capital Report

Ambuja Cements Ltd.'s Q3 FY24 Ebitda came lower than consensus estimate by 13%. This is led by higher raw material cost from purchase of clinker. Volume growth in consolidated business continues to remain weak at 3% YoY in Q3 FY24 and thus Ambuja Cements is loosing market share to its peers.

Weak volume is led by lack of capacity but on positive side Ebitda/tonne at Rs 1228 is better than peers. We understand volume growth to get support once Ambuja Cement starts commissioning capacity.

Ambuja Cement is expected to increase its capacity by 27% / 11% in FY25E and FY26E and has ordered equipment.

We have roll forward target price to FY26E but retain 'Sell' rating and prefer ACC Ltd. (as its profitability is improving). Our revised target price on Ambuja Cements is Rs 522 (earlier Rs 371).

For Ambuja Cement we value at 15 times FY26 enterprise value/Ebitda and its ACC stake is valued at 20% discount to current market price.

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