Ambuja Cements Ltd (ACEM) has released its latest investor presentation unveiling its medium term growth plans for capacity expansion and efficiency improvement. the company has disclosed that internal accruals of both ACC and Ambuja are enough to double the capacity of the company from 67.5 mn mt to 140 mn mt.
“We believe that capex assumption by the company is aggressive in nature and over all capex will actually be lower as greenfield units will take time for implementation. We also believe that aggressive growth plans will result in competition in gaining market share and hence cash flow generation will be lower than the estimate. Overall, we expect the company to deliver superior volume growth along with margin expansion over the next 4‐5 years and the Stock is currently available at reasonable valuations,” said brokerage Centrum which has reiterated its buy rating on the Adani Group stock with a target price of ₹453.
Adani Group released a roadmap for ACC / Ambuja Cements future growth / profitability, reiterating its target to double cement capacity to 140 MT (16% CAGR) by FY28 to be all funded via internal accruals.
“We believe most of these announcements were on anticipated lines and business as usual. Our FY23-25E estimates remains unchanged. Maintain BUY with target price of ₹470 valuing the stock at 13x FY25 EV/EBITDA. Any inorganic growth announcement which allows group to gain market share remains key trigger for the stock, in our view,” said Antique Stock Broking.
The Adani Group has been diversifying its business interests and last year bought cement firms ACC and Ambuja Cements from Switzerland’s Holcim for $10.5 billion.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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