Ambuja Cement, Dabur, Nuvoco Vista, ACC, Orient Cement, Greenpanel Q4 Results Review: HDFC Securities

HDFC Securities Institutional Equities

Ambuja Cement - Focus on cost reduction; expansions on track

We maintain Add with an unchanged target price of Rs 620/share (16.5 times its consolidated FY26E Ebitda). During Q4 FY24, consolidated volumes rose 17% YoY owing to the low base and ramp-up of recently acquired Sanghi plants.

Weak pricing across markets drove down net sales realisation by Rs 394/metric tonne QoQ (-7%). Opex too fell Rs 190/mt on op-lev gains and lower input/freight costs.

Thus, consolidated unitary Ebitda declined Rs 203/mt QoQ to Rs 1,026/mt (up Rs 150/mt YoY). Sanghi ramp-up and upcoming expansions should bolster volume growth from FY25 onwards. We estimate a 13.5% compound annual growth rate for FY24-26E versus 7% in FY24.

We also estimate unit Ebitda to expand by Rs 200/mt in FY26 (over FY24) to ~Rs 1,300, benefiting from various cost reduction exercises underway. The company reiterated its organic expansions are on track to expand the group cement capacity to 140 million metric tonne by FY28.

Dabur - Skewed growth

Dabur India Ltd.’s Q4 FY24 results were above estimates; however, sales growth was lopsided, with the majority of the beat coming from the oral care segment and rural driven.

Rural grew (8%) at almost twice of urban areas on the back of company-specific initiatives such as expanding the distribution network, launching affordable price point packs, and increasing acceptance of Ayurveda.

The oral care segment grew 22% YoY due to market share gains, higher per capita income in the South (Dabur stronghold) and enhanced distribution reach.

The healthcare range (30% of domestic sales) disappointed due to the delayed winter season (Chyawanprash) and supply chain-related issues (honey).

Foods (22% of sales) remained flat due to high base impact and delayed arrival of the summer season. Similarly, currency devaluation impacted otherwise decent growth in international business (12% CC growth).

Dabur remains optimistic about high single-volume growth with double-digit revenue growth, led by-

1. focus on power brands;

2. distribution expansion drive; and

3. premiumisation.

Management guided for 50 basis points Ebitda margin improvement to 20% in FY25. We remain sceptical about management guidance (have pencilled only 9% revenue growth in FY25), given their volatile track record (6/8/7% revenue/Ebitda/PAT compound annual growth rates over the past decade).

It will require the support of macro tailwinds such as favourable weather conditions (given the high seasonal portfolio) and normal monsoon to drive a sustained momentum in rural to deliver DD revenue growth.

We maintain Add with a target price of Rs 595 (45 times FY26 earnings per share).

Nuvoco Vistas Corporation - Leverage cools off to an eight-year low!

We maintain a Buy rating for Nuvoco Vistas Corporation Ltd., with a revised target price of Rs 470/share (nine times its consolidated Mar-26E Ebitda). In Q4 FY24, Nuvoco’s volume was muted (grew 2% YoY).

A sharp fall in pricing in the east pulled down NSR by 8% QoQ. However, major op-lev gains cushioned the impact. Thus, unit Ebitda declined from Rs 125/mt QoQ to Rs 866/mt.

Importantly, Nuvoco also tightened its working capital, freeing up cash. Thus, net debt/ Ebitda cooled off to 2.7 times (its lowest in the past eight years).

It has also put expansion projects on hold, as the focus remains on balance sheet repair, which is a good strategy, in our view.

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