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Motilal Oswal Report
Ambuja Cements Ltd. reported significantly higher Ebitda (23% above our estimate), led by strong volume growth and increased cost-reduction measures. Ebitda grew 39% YoY to Rs 9.5 billion (estimate: Rs 7.7 billion).
Ebitda/tonne stood at Rs 1,045 (versus estimate: Rs 984) and operating profit margin surged 3% YoY to 20% (estimate: 18.6%). Adjusted profit after tax was down ~28% YoY, due to dividend income from ACC Ltd. in the same quarter previous year.
The management reiterated its expansion plan of doubling grinding capacity to 140 million tonnes per annum by FY28. In the first phase, it has outlined capacity expansion of 14 mtpa, which will be completed in the next 24 months.
It targets sustainable cost reductions of Rs 400/tonne through lower energy, freight, and other costs.
We raise our FY24E/FY25E Ebitda by 13%/12%, given the outperformance in Q1 FY24.
Ambuja Cements trades at 17.7 times/16.3 times FY24E/FY25E enterprise value/Ebitda.
We maintain our 'Neutra'l rating with a revised target price of Rs 450, based on 15 times FY25E EV/Ebitda.
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