Ambuja Cements Q4 Results Review: Analysts Expect Strong Profitability After Profit Beat

Shares of Ambuja Cements Ltd. closed lower on Wednesday after gaining earlier in the day as brokerages expected strong profitability in the coming quarters.

The Adani Group-owned cement maker's fourth-quarter net profit rose 1.62% year-on-year to Rs 502.4 crore, according to a stock exchange filing, compared to Bloomberg estimates of Rs 493.48 crore.

Meanwhile, revenue gained 8.39% to Rs 4,256.31 crore.

Ambuja Cements Q4 FY23 (Standalone, YoY)

• Revenue is up 8.39% at Rs 4,256.3 crore (Bloomberg estimates: Rs 4,184.9 crore).

• Ebitda is down 0.64% at Rs 788.3 crore (Bloomberg estimates: Rs 827.1 crore).

• Ebitda margin at 18.52% vs. 20.20% (Bloomberg estimates: 19.8%).

• Net profit is up 1.62% at Rs 502.4 crore (Bloomberg estimates: Rs 493.5 crore).

• The board recommended a final dividend of Rs 2.50 per share for fiscal 2023.

Shares of Ambuja Cements declined 2.73% to close at Rs 383.65 per share, as compared with a 0.32% decline in the benchmark Nifty 50.

Of the 37 analysts tracking the stock, 16 maintained 'buy', 11 suggested 'hold', while five recommended 'sell', according to Cogencis data. Meanwhile, of the remaining five analysts, three maintained a neutral stance between 'buy' and 'hold', while two kept a neutral stance between 'hold' and 'sell'.

Here's what analysts said about the results:

Jefferies

• Maintains 'buy' on Ambuja Cements given strong Ebitda growth prospects.

• Cuts price target to Rs 480 from Rs 490.

• Sharply lower than expected other expenses primarily drove the beat.

• Says management expects capex at Rs 7,000 crore for FY24.

• Says management targets more expansion in the near term, given the better preparedness of mines.

• Ambuja reported Ebitda beat at Rs 790 crore, driven by lower other expenses.

• Trims company's consolidated Ebitda by 6–7% for FY24–FY25.

Incred Equities

• Recovery in the fourth quarter was better than expected.

• Group decided to foreclose the EPC contract and recover its advance of Rs 1,815 crore without penalty.

• Company delivered strong Q4 profitability performance, mainly due to cost savings and operational synergy.

• Higher volume and lower costs led profitability to beat estimates.

• Sharp drop in global fuel prices over the last two months should drag overall costs for most players down and improve industry margins in the medium term.

• Management says that fuel costs are expected to further reduce in the coming months through synergies with the group.

• Expects business initiatives to further bring down operating costs, reduce the clinker factor, reduce logistics costs, improve the sale of blended cement, and expand profitability.

• Says management expects Ebitda per tonne to be in the range of Rs 1,200–1,400 in FY24, led by continued focus on cost reduction and synergies in operations.

Nuvama Institutional Equities

• Retains 'buy' and raises the target price to Rs 458 from Rs 452.

• Company delivered impressive margin recovery on a sequential basis.

• Raises FY24 and FY25 Ebitda estimates by 7% and 5%, respectively, factoring in better-than-expected cost savings.

• Realisations were weak but impressive in terms of cost reduction.

• Says street will keenly track ordering to assess the trajectory of future capacity addition.

• Anticipates aggressive capacity growth and huge potential to optimise costs.

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