Ambuja Cements - Remains ‘In The Catbird Seat’; Maintain Buy: ICICI Securities

ICICI Securities Report

We hosted Ambuja Cements Ltd. management for an investor roadshow in South-East Asia.

Highlights:

1. Ambuja Cements sees industry consolidation continuing over the next few years, thereby enabling margin improvement in the medium-to-long run.

2. Penna Cement acquisition is a ‘shot in the arm’ given Penna balances its regional mix and substitutes time required for organic expansion (besides being a quality asset).

3. Ambuja Cements is committed to scale capacity to 140 million tonnes per annum (89 mtpa currently, post Penna acquisition; on track to achieve 110 mpta by FY26 post-completion of projects in hand) and also demonstrate Rs 530/tonne of cost rationalisation by FY28 (with bulk of the optimisation plan being capex-led).

4. Ambuja Cements will eventually consolidate all its cement companies under a single entity at an appropriate time.

We remain enthused about the industry-superior growth prospects for Ambuja Cements and maintain 'Buy' with a target price of Rs 831.

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