ICICI Securities: Ambuja Cements - Improving Margins To Narrow Valuation Gap
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ICICI Securities Report
Ambuja Cements Ltd.’s various cost optimisation initiatives coupled with master supply agreement synergies with ACC Ltd. under Mr. Neeraj Akhoury, Managing Director and Chief Executive Officer (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 H1 CY21E would not only lend better volume visibility, but also improve overall profitability.
Ambuja Cement currently trades at an attractive valuation of 8.3 times CY21E enterprise value/Ebitda (for consolidated capacity of approximately 66mnte).
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