Ambuja Cement Share Price Edges Higher As CLSA Maintains 'Outperform' Rating

Ambuja Cement Ltd.'s share price rose 1% on Tuesday following positive commentary from CLSA. The brokerage maintained its 'Outperform' rating for the cement giant, with a target price of Rs 665, citing an improving demand and profitability outlook. As per the brokerage, Ambuja Cement expressed a constructive view on the company's prospects.

A significant portion of the conversation centred on the potential impact of the recent GST reduction on cement demand and profitability. On Sept. 3, The GST Council on approved the reduction of GST on cement from 28% to 18%.

Adani Cement, which owns Ambuja Cements & ACC, said a reduction in duty on cement will "accelerate the nation's infrastructure pipeline, catalyse industrial expansion, and strengthen India's march towards a multi-trillion-dollar economy," PTI had reported.

The brokerage believes that the company's realisations are likely to improve, with premiumisation and the indirect tax reduction serving as key catalysts. While Ambuja Cements noted that near-term demand has been affected by the monsoon season and purchase deferrals due to the GST cut, the company remains optimistic about its medium-term growth trajectory.

It expects the broader cement industry to grow by 7-8% and projects its own growth to be in the double digits. The company also reiterated its long-term targets of achieving a 20% market share and a profitability of Rs 1,500 per tonne.

The scrip rose as much as 1% to Rs 576 apiece. It pared gains to trade 0.21% higher at Rs 571.50 apiece, as of 10:55 a.m. This compares to a 0.25% advance in the NSE Nifty 50 Index. It has fallen 9.31% in the last 12 months. The relative strength index was at 44.

Out of 46 analysts tracking the company, 35 maintain a 'buy' rating, eight recommend a 'hold,' and three suggest 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an upside of 14%