ICICI Securities is bullish on Ambuja Cements recommended buy rating on the stock with a target price of Rs 255 in its research report dated August 26, 2020.
ICICI Securities research report on Ambuja Cements
Ambuja Cements’ (ACEM) various cost optimisation initiatives coupled with MSA synergies with ACC under Mr. Neeraj Akhoury, MD&CEO (also India head, LafargeHolcim) could achieve sustainable cost reduction (at least 15-20% of CY19 EBITDA/te, in our view) over the next few years. Commissioning of 3.1mnte clinkerisation plant at Marwa-Mundwa by H1CY21E would not only lend better volume visibility, but also improve overall profitability. With higher profitability, valuation gap vs peers may narrow.
Outlook
We maintain our CY20E-CY21E EBITDA estimates (~13% ahead of consensus) with the target price unchanged at Rs255/share (10x Mar’22E EV/E). ACEM currently trades at an attractive valuation of 8.3x CY21E EV/E (for consolidated capacity of ~66mnte). Maintain BUY.
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