Ambuja Cements will continue to de-rate; recommend ‘sell’: Macquarie

NEW DELHI: The margin expansion for Ambuja Cements has peaked out and given the oversupply it will be a struggle to even maintain them, Macquarie said in a note on Friday.

Macquarie thinks Ambuja Cements will continue to de-rate and recommend selling.

On Thursday, Ambuja Cements reported 5.5 per cent growth in its annual net profit for 2012 at Rs 1,297 crore on higher realisation. Net sales of the company grew by 13.8 per cent to Rs 9,675 crore compared to Rs 8,504 crore a year ago.

Macquarie maintains ‘underperform’ rating on Ambuja Cements with a target price of Rs Rs 124 expecting 39 per cent downside from current levels.

“Also questions have been raised about Holcim raising royalty sustainable in future from the current 1 per cent, which can effectively take away potential profit growth,” said the report.