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IDBI Capital Report
Ambuja Cements Ltd.'s standalone Q1 FY24 EBITDA beat our/consensus estimates by ~15% as volume increased by 23% YoY. However, with inter company transfer of raw material, consolidated volume increased by 9% YoY and is lower than double digit volume increase reported by its peers.
Volume growth could be constrained till capacity is commissioned. On consolidated capacity, Ambuja Cements plans to add 14 million tonnes per annum by FY26E and post that 59 mtpa over FY26-28E.
Based on capex split of 35:65 for ACC Ltd. and Ambuja Cements, Ambuja Cements could see capacity increase at compound annual growth rate of 27% over FY24-28E versus ACC of 12% CAGR.
Stock on consolidated basis trades at ~14 times enterprise value/Ebitda and we understand its factoring planned capacity addition.
Post the result we have increased exit multiple of Ambuja Cements to 14 times but retain 'Sell' rating with revised target price of Rs 371 (earlier Rs 333).
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