Prabhudas Lilladher has given Buy recommendation for Ambuja Cement with a target price of Rs. 375 in its research report issued on Apr 29, 2021
Prabhudas Lilladher’s research report on Ambuja Cement
Ambuja Cement (ACEM) delivered earnings beat for fifth consecutive quarter. EBITDA grew 62% YoY at Rs9.8bn with a beat of 31%/34% on our/consensus estimates (CE). The beat was largely driven by lower than expected costs. Management’s aggressive guidance on new expansions (69% increase in capacity to 50mnt) and cost reduction reinforces our positive outlook on ACEM.
We believe that current cost is stickier in nature, driven by multi-fold increase in volumes under MSA, logistics optimisation, change in power procurement, shift in market mix, etc. Cost would further come down on back of quantum increase in share of renewable energy by 6.6x to 38%. Led by improved visibility on capacity expansion and sustained control on costs, we reiterate BUY rating with revised TP of Rs375 (earlier Rs340), EV/EBITDA of 14x (earlier 13x) CY22e.