Motilal Oswal's research report on Ambuja Cements
ACEM’s operating performance in the Jan-Mar’23 quarter was in line with our estimates, with EBITDA at INR7.9b (est. INR7.8b) and EBITDA/t at INR977 (est. INR951). Higher other income and a lower tax rate led to a ~21% beat in adjusted PAT at INR5.6b. The management aims to double the grinding capacity to 140mtpa in the next five years and has outlined the first phase of expansion of ~11mtpa (orders will be placed in the near term). It targets cost reductions of INR300- 400/t and aims to achieve EBITDA/t of INR1,200-1,400/t in FY24.
Outlook
We largely maintain our earnings estimates, with EBITDA/t assumptions of INR1,078/INR1,162 in FY24E/25E. Cost-saving strategies and equipment ordering will be key monitorables for a constructive view on the company. We maintain a Neutral rating with a revised price target of INR390, based on 15x FY25E EV/EBITDA (v/s Sep’24E earlier).
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