Ambuja Cements got a 'buy' rating from Investec as the brokerage initiated coverage on the stock, with a target price of Rs 836. This comes after the cement maker restated its goals on capacity targets, emphasising cost efficiencies with target Ebitda of Rs 1,500 by fiscal 2028.
Ambuja's incremental pipeline of cement and clinker is up to 107/36MT capacity. Of this, up to 43%/68% is brownfield in nature, which bodes well for incremental RoCE, according to the brokerage.
Management emphasised on Adani group synergies via cost, that includes target capex intensity less than $75-80/t, OPEX efficiencies, sustainability and technology.
The management has reiterated its goals of achieving 60% green power by FY28 and increasing the sea logistics business 5% to 8% by FY28. "The company is in advanced stages of placing order for another seven vessels, which will take the total count to 18 vessels in next two years. That TSR 27% by FY28, and eventually target Rs 1,500/t by FY28," it stated.
Key incremental levers to drive incremental savings include energy and fuel related optimisation, including substituting high-cost power to AFR/TSR/RE, reduce imported coal.
"Other key incremental levers are freight synergies including sea freight, EV adoption, reverse bidding; long term fly ash and RM sourcing arrangements and deploying optimisers to improvise logistics or MSA feed amongst others," it said.
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