Ambuja Cements expects industry demand growth for CY22 to be in line with GDP growth for the country, however, demand for the current quarter is not matching expectation,
Ambuja Cements expects industry demand growth for CY22 to be in line with GDP growth for the country, however, demand for the current quarter is not matching expectation, Jefferies India said. Currently, demand is good in urban centers, but weak in rural markets. Jefferies also added that the medium term (3-5 years) demand prospects look promising with the government’s focus on housing and infrastructure development. On Wednesday, Ambuja Cement share price was ruling 3 per cent up at Rs 304.90 apiece on BSE.
Jefferies has maintained its ‘buy’ rating on the stock with a price target of Rs 360 apiece, potential upside of 27 per cent from last close. Among other cement companies stocks, Jefferies has a ‘buy’ rating on ACC as well. It has recommended to hold UltraTech Cement, Shree Cement and The Ramco Cements stocks. Jefferies noted a few key risks related to its buy call, which include delay in ramping up of recently commissioned capacity; significant capacity addition by the industry in key markets; weaker-than-expected demand growth in key markets; and higher than expected increase in costs sustaining.
The brokerage firm expects Ambuja Cements to record 12%/13% Ebitda/PAT Cagr for CY21-24. “But there are challenges for CY22 earnings due to current steep cost inflationary
trend,” it added. According to the research firm, Ambuja Cements enjoys a net cash balance sheet, a positive at the time of uncertainty about the business cycle. Recent capacity addition in Marwa Mundhwa, Rajasthan, is likely to result in strong volume growth for the next 3-4 quarters. Restructuring of India leadership and acute cost focus to drive margins higher, it also noted.
Ambuja Cements stock movement
Ambuja Cements stock has gained 2.3 per cent in the last five days. While it has plunged 16 per cent in one month, and nearly 30 per cent in the past six months. So far in calendar year 2022, Ambuja Cements stock price has fallen 21.6 per cent. In traded volume terms, 66,000 shares have exchanged hands on bse, while 34.85 lakh were traded on NSE, so far in the day.
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