Ambuja Cements vs ACC: Share price targets for Adani stocks, outlook & more

Adani group cement makers Ambuja Cements and its subsidiary ACC have reported their June quarter results. While Ambuja Cements reported a 31.21 per cent year-on-year (YoY) rise in consolidated net profit at Rs 1,135 crore, ACC logged doubling of profit at Rs 466 crore for the same period. In terms of top line, ACC reported a 16 per cent rise in revenues at Rs 5,201 crore while Ambuja Cements saw a 8.46 per cent YoY jump in sales at Rs 8,713 crore. The average target price for ACC, as suggested by Trendlyne, suggests a 15 per cent potential upside for the stock. Ambuja Cements’ target price, on the other hand, suggests a 3 per cent potential downside.

Ambuja Cements target price

In the case of Ambuja Cements, Motilal Oswal Securities said the Adani firm has delivered strong performance, led by better volumes and increased cost-reduction measures. It said it would monitor the sustainability of Ambuja Cements' cost-saving measures and the progress in improving profitability. This brokerage finds valuation for Ambuja Cements at 17.7 times EV/Ebitda rich. It has a neutral rating on the stock with a target of Rs 450.

"Ambuja Cements remains committed to doubling its consolidated capacity by FY28. Its planned expansion will start getting operational FY26E onwards. It is working on various cost-reduction exercises to boost margins by Rs 300-400 per million tonne YoY in FY24E. Opex reduction and major capacity expansion remain key catalysts for valuation rerating," said HDFC Institutional Equities. This brokerage has a target of Rs 460 on the stock.

Factoring in lower opex per tonne, Emkay Global has increased its FY24E-25E Ebitda estimates by 4-5 per cent for Ambuja Cements. Since the brokerage has raised the target price of ACC, it has upped its Jun 2024 target for Ambuja Cements to Rs 480 per share post the quarterly results.

Motilal Oswal Securities has a target of the 450 on the stock. On Thursday, the stock traded at Rs 465.75 on BSE, up 1.04 per cent.

ACC target price

Nuvama Institutional Equities said ACC's June quarter results were marked by healthy volume growth of 23 per cent YoY. It said realisation decreased down 4 per cent YoY) but was largely in line with estimates. ACC's Q1 Ebitda beat Nuvama's  estimate by 15 per cent while Ebitda per tonne at Rs 818 was 30 per cent above its estimate.

"The Ametha plant (3.3MTPA clinker capacity) is expected to become operational in Q2FY24. Factoring in strong volumes and better cost efficiency, we are raising FY24/25 Ebitda estimates by 9 per cent/7 per cent. ACC is trading at an attractive 10.8 times FY25 EV/Ebitda and $109 EV/tonne," the brokerage said while revising its target on the stock to Rs 2,352 from Rs 2,135 earlier.

Choice Broking said its optimistic forecast for ACC is due to positive operating leverage and strong demand for high-quality cement products. ACC aims to double its capacity to 140 million tonne within the next five years, up from the current capacity of 70 million tonne. This brokerage has a target if Rs 2,167 on the stock.

"ACC reported industry-leading volume growth of 23 per cent YoY, partly led by the increased MSA transaction with Ambuja Cements. Total cost per tonne declined 11 per cent, benefiting from the lower input prices and better operating leverage. Factoring-in the Q1FY24 beat, we increase our FY24-25 Ebitda estimates by 2-9 per cent. With improving profitability, we raise our target EV/E by one notch to 12 times, with revised Jun 2024 target of Rs2,300 per share post the quarterly roll over," Emkay Global said.

Also read: Adani Group’s Ambuja Cements announces acquisition of Sanghi Industries at Rs 5,000 crore

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