Reliance Securities maintained buy on Ambuja Cement, target price Rs 233

Reliance Securities has maintained its buy recommendation on Ambuja Cement with a target price of Rs 233. The stock ended at Rs 207.65 on Friday while BSE Sensex closed 246.32 points up at 39,298.38.

Company Financials

For the quarter ended 30-09-2019, the company has reported consolidated sales of Rs 6077.62 crore, down -14.02% from last quarter sales of Rs 7068.79 crore and up 1% from last year same quarter sales of Rs 6017.58 crore. The company has reported net profit after tax of Rs 529.03 crore in latest quarter.


Investment Rationale

Looking ahead, likely commissioning of clinker unit in 2021 will be a catalyst for the stock, which will ease the concern over capacity constraint, said the brokerage. Further, absence of incentives for its Maharashtra unit from Apr’20 will impact its profitability, which is expected to be recovered with likely pick-up in realisation and cost savings initiatives, it said. The company’s decision to amalgamate its WOS, ‘Dirk India Pvt’ is a cost-saving initiative during the quarter.