Ambuja Cements Q2 Results Review - Valuation Rich, Prefer ACC: IDBI Capital

IDBI Capital Report

Ambuja Cements Ltd.'s Q2 FY24 Standalone Ebitda came in-line with our and consensus estimate. In consolidated business, we noticed improved Ebitda/tonne at Rs 994 and is better than peers.

However, lower volume growth has been concerning, as consolidated volume growth was muted at 2% YoY. Volume growth was impacted from flood in Himachal Pradesh and Central and Ambuja Cements guides volume growth has picked up in Q3 FY24.

But we understand till new capacity get commissioned, volume growth could be constrained versus peers.

Ambuja Cements has provided granular details on capacity addition, and on target commissioning its capacity to increase by 18% in FY25E and 8% in FY26E.

We retain estimate for Ambuja Cements post the result with unchanged target price of Rs 371 and 'Sell' rating. Valuing at 15 times FY25 enterprise value/Ebitda, we see valuation is rich for the company prefer ACC Ltd.

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