Hem Securities report on Ambuja Cement
The company improved its ROE from 13.21 in CY20 to 15.34 in FY21. ROCE of the company improved to 21.95% in CY21 from 17.55% in CY20. Revenue increased to Rs.8032.9 cr in Q2CY22 (+15.1% YoY) on improved realizations and strong growth in sales volume. Company ongoing expansion projects include :1) grinding capacity of 1.5 mtpa in Ropar (Punjab), 2) 3.2 mtpa clinker expansion in Chhattisgarh, 3) 7 mtpa grinding capacity in East India (including a greenfield grinding unit in Bihar). The company is also setting up WHRS facility at multiple plants. Total WHRS capacity to reach 87 MW (post commissioning of all projects) from current capacity of 7.5 MW. The management continues to focus on sustainable growth, with a higher share (89%) of blended cement and a thermal substitution rate of 6%. The company processed the higher ever waste 2QCY22. The timely completion of growth plans and cost-saving strategies by the new management will be the key triggers for the stock’s performance. Going ahead, the organization's solid spotlight stays on paying off its debt with higher sales and better cash flow generation.
Outlook
Company is well-placed to pursue growth opportunities with a net cash of Rs.43.4b in CY23E. We have maintained Accumulate rating on stock and value the stock at 25.6x FY23 earnings to arrive at the target of Rs.448.
More Info
At 11:17 hrs Ambuja Cements was quoting at Rs 417.05, up Rs 1.50, or 0.36 percent.
It has touched an intraday high of Rs 419.20 and an intraday low of Rs 416.10.
It was trading with volumes of 110,289 shares, compared to its thirty day average of 228,251 shares, a decrease of -51.68 percent.
In the previous trading session, the share closed up 1.35 percent or Rs 5.55 at Rs 415.55.
The share touched its 52-week high Rs 442.95 and 52-week low Rs 274.00 on 08 September, 2021 and 08 March, 2022, respectively.
Currently, it is trading 5.85 percent below its 52-week high and 52.21 percent above its 52-week low.
Market capitalisation stands at Rs 82,811.33 crore.
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