Buy Ambuja Cements, target price Rs 750: Motilal Oswal Financial Services

Motilal Oswal Financial Services has a buy call on Ambuja Cements with a target price of Rs 750. The current market price of Ambuja Cements is Rs 555.45. Ambuja Cements, incorporated in 1981, is a largecap company with a market cap of Rs 136912.72 crore) operating in cement sector.

Ambuja Cements' key products/revenue segments include cement, other operating revenue and scrap for the year ending 31-Dec-2021.

Financials

For the quarter ended 30-06-2024, the company has reported a consolidated total income of Rs 8666.20 crore, down -5.05 % from last quarter Total Income of Rs 9127.45 crore and down -3.45 % from last year same quarter Total Income of Rs 8976.14 crore. Company has reported net profit after tax of Rs 786.24 crore in latest quarter.

Investment Rationale
Ambuja Cements is continuously focusing on cost reduction by increasing the green power share, optimizing logistics via lead distance reduction, and optimizing the warehouse and rail-road mix. We believe the company's value-accretive acquisitions and ambitious organic expansion plans will drive growth and profitability in the long run. The stock currently trades at 17x/13x FY26E/FY27E EV/EBITDA. Motilal Oswal values Ambuja Cement at 20x Sep?26E EV/EBITDA to arrive at our target price of Rs 750. The brokerage reiterates BUY.

Promoter/FII Holdings
Promoters held 67.57 per cent stake in the company as of 30-Sep-2024, while FIIs owned 10.61 per cent, DIIs 14.96 per cent.