BQ Prime's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer BQ Prime's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Yes Securities Report
Ambuja Cements Ltd.'s performance came as anticipated, where Ebitda/tonne came at Rs 1042 (versus Rs 1064 our estimate) in Q1 FY24.
Volume grew by 23% YoY led 18% YoY revenue growth even though net sales realisation moderated by 4% YoY.
Total cost/tonne moderated by 7% YoY, led Ebitda to grow by 39% YoY, and adjusted profit after tax up by 29% YoY (excluding dividend income Rs 5.5 billion in Q1 FY23).
Ambuja Cements narrowed the efficiency gap with its peers by adopting cost-effective measures. Management to focus on improving the efficiencies and achieve +Rs 1400/tonne of Ebitda with a fresh set of investments in-
augmenting waste heat recovery system and renewable energy capacities,
ramping up alternate fuel and raw material usage,
upgrading equipment and debottlenecking for kiln efficiencies
higher trade and premium sales.
Under new management, Ambuja Cements target to reach 140 million tonnes per annum by FY28E to regain the lost market share.
On console, Ambuja Cements plans 14 mtpa of grinding unit and 12.75 mtpa of clinker with a capex outlay of Rs 70 billion (65% Ambuja Cements standalone), taking the console capacity to 82.7 mtpa (45.5 mtpa standalone) by FY25E.
As a result, incremental volume from new capacities is expected from FY26E onwards, while standalone cement volume should grow at 4% compound annual growth rate for FY24-25E due to a lack of production headroom.
Ambuja Cements is a net cash company holding a significant cash and cash equivalent of Rs 90 billion as of March 2023, will aid funding the announced expansion and efficiency plans through internal accruals.
Further, the promoter group committed for infusing Rs 200 billion towards subscribing share warrants, of which Rs 50 billion has received and the rest is expected to exercise on or before April 2024.
We value Ambuja Cements on SOTP based valuation with a standalone entity valued at 14 times enterprise value/Ebitda and Ambuja Cements stake in ACC Ltd. at 10 times EV/Ebitda on FY25E by adding Rs 47 billion net cash. Thus, we arrived at target price of Rs 396 with a 'Sell' rating.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.