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Nirmal Bang Report
Ambuja Cements Ltd.'s overall revenue came in 14% lower than our estimate (actual/estimated: Rs 74,240 million/Rs 86,308 million) due to reported volume decline of 14% YoY (actual/estimated: 13.1 metric tonne/15.2 metric tonne).
The acquisition of Sanghi Cements will expand the company's market reach in Gujarat and coastal markets. Focus is on increasing Ebitda, optimising warehouse space and balancing rail and road transport to reduce costs and increase margins.
Despite having a high base, we anticipate robust revenue growth during FY24-FY25.
To account for the capacity expansion (organic and Sanghi Industries Ltd. acquisition), we have increased our FY24E/FY25E Ebitda estimates by 3%/19% and earning per share estimates by 6%/17%, resulting in a revised target price of Rs 602 (versus Rs 548 earlier).
We have maintained our 'Buy' rating on Ambuja Cements and value the stock at 12 times September 2025E enterprise value/Ebitda.
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