Arihant Capital has given Buy recommendation for Ambuja Cements with a target price of Rs. 349 in its research report issued on Feb 23, 2021
Arihant Capital’s research report on Ambuja Cements
Ambuja Cement Limited reported good set of numbers for Q4CY20. Revenue from operations grew by 12.1% YoY and 23.6% QoQ to INR 3515 crore above our estimates of INR 3355 cr backed by good growth in volume & realization growth . Sales volume grew by 7.2 % YoY and 23.6% QoQ to 7.01 mn tons. Realization/ton grew by 4.6% YoY, however declined marginally by 0.3% to INR 5014 per tonne against our expectation of INR 4794 per tonne.
We value the standalone business to 16x to its CY22E EBITDA and arrive at a fair value of INR 281/share while Ambuja’s 50% stake in ACC has been valued at INR 68 per share (based on our ACC’s TP of INR 2042). Our SOTP valuation yields a fair value of INR 349 per share. We upgrade our rating from Hold to Buy on stock.