Why IDBI Capital Prefers ACC Over Ambuja Cements
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IDBI Capital Report
ACC Ltd. and Ambuja Cement Ltd. board has approved continuation of existing technology and know-how agreement (TKH agreement) at 1% of net sales with Holcim Technology Ltd.
We understand this will come as relief for both the company, as street feared that TKH fee will see an increase.
Both the stocks were down by 8-10% in the last one month relative to its large cap peers like Ultratech Cement Ltd., Shree Cements Ltd.
We prefer ACC due to -
- Simplified structure versus holding company structure of Ambuja Cement, and
- Valuation, ACC is trading at 10% discount to Ambuja Cement valuation at 9 times CY22E enterprise value/Ebitda.
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