Ambuja Cements Q4 Results Review - Weak Realisation Hurts; Focus Remains On Cost Control: Motilal Oswal

Motilal Oswal Report

Ambuja Cements Ltd.’s standalone Ebitda was up 1% YoY to Rs 8.0 billion (versus estimate of Rs 9.3 billion). Ebitda/tonne came in at Rs 837 (estimate Rs 1,038) and operating profit margin stood at 16.7% (versus estimate 19.8%). Profit after tax (adjusted for loss on the sale of Sanghi’s share in open market) was Rs 5.4 billion (versus estimate Rs 6.3 billion).

Consolidated volume grew 17% YoY in Q4 FY24. Ebitda grew 37% YoY to Rs 17 billion and Ebitda/tonne was up ~17% YoY (down 17% QoQ) to Rs 1,025.

Ambuja Cements targets further cost reduction by Rs 530/tonne to Rs 3650/t (at consolidated) by FY28 to become the cost leader in the industry.

Its key focus areas would be logistics optimisation, reduction in energy and raw materials costs. It aims to commission clinker/grinding capacity of 4 mtpa/4.8 mtpa by Q4 FY25.

We maintain our earnings estimate for FY25/FY26. Ambuja Cement trades at 19.6 times/ 16.8 times FY25E/FY26E EV/Ebitda (standalone).

We maintain our Neutral rating on the stock as we await clarity on the expansion plans of the company.

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