Axis Securities
Target: ₹405
CMP: ₹365.35
Ambuja Cements (ACL) commissioned an integrated cement plant with a clinker capacity of three million tonnes per annum (mtpa) and cement manufacturing of 1.8 mtpa at Marwar-Mundwa, Rajasthan, augmenting its production capacity to 31.45 mtpa. The company has unveiled capacity expansion plans comprising a brownfield expansion of 1.5 mtpa at Ropar, Punjab, by 2023. It intends to undertake further expansions in Eastern and Western India by setting up the plant to reach a capacity of 50 mtpa in the next few years.
It continues to strengthen its market reach along with improving its sale of premium products. ACL continues to enhance its share of green power through significant investments in waste heat recovery system and solar power plants. It has undertaken ESG initiatives to reduce carbon emissions.
Net sales grew by 23 per cent on a year-on-year basis to ₹13,794 crore. The growth can be attributed to robust market demand, improvement in realisations, and a favourable product mix.
We expect ACL to deliver volume/revenue/EBITDA/APAT CAGR of 5 per cent / 8 per cent / 6 per cent / 6 per cent over CY21-CY23E as we factor in the impact of higher costs on the company’s margins.We value ACL at 13x CY23E EV/EBITDA (including stake in ACC with no holding company discount) to arrive at the target price of ₹405/share