Ambuja Cements beats estimates in Q4 but analysts say near-term growth likely to remain low

Morgan Stanley said the company’s earnings before interest, taxes, depreciation, and amortisation, or EBITDA was in-line while revenue was slightly better, offset by higher opex.

The analyst believes Ambuja Cements’ medium-term expansion plans are intact, but near-term growth shall remain low. It expects profitability to improve with group synergies playing out.

Following the March quarter result, CLSA reiterated its guidance of Rs 300-400/t EBITDA. It expects improvement in FY24 and doubling of capacity over the next five years. The brokerage of the view that lower costs lead to sequential rise in profitability. It has also factored in a nine percent volume CAGR over FY23-26 and EBITDA/t CAGR of 15 percent.

Nuvama said that like its subsidiary ACC, Ambuja Cement, too delivered an impressive margin recovery (300bp) on a quarter on quarter basis. It added that as volumes grew eight percent YoY, cost control measures (including synergies with ACC) led to cost per tonne coming off 6 percent sequentially.

The group has planned a capex of Rs 72 billion in FY24 towards capacity enhancement (26MT) and process optimisation over the next few years and it is also targeting INR300–400/t improvement in EBITDA in the fiscal through cost optimisation, the brokerage pointed out.