Ambuja Cements Q1 Results Review - Growth Expected In H2 FY25: IDBI Capital

IDBI Capital Report

Ambuja Cements Ltd. Q1 FY24 Ebitda came lower than estimate by 19%. This is led by decrease in cement prices. Ambuja Cements is expected to increase its capacity by 27% / 11% in FY25E and FY26E and currently the expansion programme is on track.

The company is also planning to reduce opex and improve Ebitda by various methods. We revise target price and upgrade to Hold rating from Sell on Ambuja Cements. On Ambuja Cements target price revised at Rs 669 and we value at 30 times FY26 enterprise value/Ebitda and its ACC stake is valued at 20% discount to current market price.

Overall capex intensity to remain high. For FY24, Capex stood at Rs 70 billion, for FY25 expecting Capex of Rs 50-60 billion. The capacity expansion plan for 140 mtpa, will be funded by internal accruals and operating cashflows, the targets are set to reach 100 mtpa by FY25, 120 mtpa by FY26 and 140 mtpa by FY28.

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