Motilal Oswal has given Neutral recommendation for Ambuja Cements with a target price of Rs. 370 in its research report issued on Feb 18, 2022

Motilal Oswal’s research report on Ambuja Cements

ACEM’s 4QCY21 result was significantly below our estimates due to higher variable costs (up 28% YoY and 25% QoQ). EBITDA stood at INR5.7b (est. INR6.7b). EBITDA/t came in at INR793 (est. INR1,043). Adjusted profit stood at INR3b (est. INR4.1b). As expected, increased opex (up 14% YoY) dented profitability. EBITDA fell 26% YoY, while adjusted profit (adjusted for an additional charge on restructuring cost) fell 40% YoY. We reduce our CY22E/CY23E EBITDA estimate by 15%/5%, considering a steep increase in energy costs. Our profit estimate for CY22E is being cut by a mere 6% (despite higher reduction in EBITDA), considering the higher dividend income from ACC. We reduce our CY23E profit estimate by 5%. The company has announced plans for increasing grinding capacities by 7mtpa in East India. Valuations at 15.3x/12x CY22/23E EV/EBITDA will restrict upside in the near term. We maintain our Neutral rating on ACEM.


The stock trades at 15.3x/12x CY22/CY23E EV/EBITDA (v/s its 10-year average one-year forward EV/EBITDA of 12.3x). There remain near-term uncertainties in its earnings outlook as the industry has not been able to raise prices for offsetting higher energy costs. We maintain our Neutral rating and value the stock at 13x CY23E EV/EBITDA to arrive at our TP of INR370.

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At 15:48 hrs Ambuja Cements was quoting at Rs 337.80, down Rs 1.20, or 0.35 percent.

It has touched an intraday high of Rs 338.35 and an intraday low of Rs 331.05.

It was trading with volumes of 205,473 shares, compared to its thirty day average of 132,590 shares, an increase of 54.97 percent.

In the previous trading session, the share closed up 0.21 percent or Rs 0.70 at Rs 339.00.

The share touched its 52-week high Rs 442.95 and 52-week low Rs 261.10 on 08 September, 2021 and 24 February, 2021, respectively.

Currently, it is trading 23.74 percent below its 52-week high and 29.38 percent above its 52-week low.

Market capitalisation stands at Rs 67,075.10 crore.

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