Ambuja Cements Q4 Results Review - Reiterating Confidence On Robust Outlook: Dolat Capital

Dolat Capital Report

Ambuja Cements Ltd.’s revenue and Ebitda were in-line, however realization, Ebitda/tonne and adjusted profit after tax were below estimates; Volume came above our estimates.

The company guided market share gains from current 14% to 20% with doubling of capacity up to 140 mtpa coupled more than Rs 1,500 Ebitda/tonne by FY28E. We expect revenue/Ebitda/ adjusted profit after tax compound annual growth rate of 10.6%/25.3%/25.4% over FY24- FY26E, led by 10.5%/13.0% volume growth and -3.0%/1.0% realisation growth in FY25E/FY26E.

We introduce consolidated estm. from standalone, reflecting fair value of business after eliminating master supply agreement among Ambuja Cements and its subsidiaries (ACC and Sanghi Industries Ltd.). We also factor significant improvement in Ebitda/tonne from Rs 1,082 in FY24 to Rs 1,204/Rs 1,360 in FY25E/FY26E.

We believe Ambuja Cements will deliver superior growth in the near term given-

1. significant capacity expansion from 78.9 mtpa (incl. 1.3 mtpa of Adani Cement) in Q1 FY25 to 85.3/93.7 mtpa in FY25E/FY26E (guidance 140 mtpa by FY28),

2. industry leading volume growth and profitability,

3. sizeable cost reduction (guided Rs 530/tonne by FY28), and

4. healthy net cash of Rs 243.4 billion (Rs 200 billion cash infusion by the promoter).

Accordingly, we upgrade to ‘Accumulate’ rating from Sell with revised target price of Rs 629 (16.5 times consolidated FY26E enterprise value/Ebitda post adjusting ACC and Sanghi Industries minority stake).

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