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Hem Securities

5.30 AM Jan 1st 1970

Ambuja Cements

BSE ID : 500425 NSE ID : AMBUJACEM

RECOMMENDED PRICE 164.75

PEAK FROM RECO 598.15 263.07%

CURRENT PRICE 632.05 Resource id #7

Ambuja Cements Ltd. (ACL) is one of the leading cement manufacturing companies in India. The Company has maintained its market share of around 9.5% on pan-India basis, despite the prevalent challenging environment.

Ambuja Cements Ltd

The company has registered excellent numbers for the quarter ending March 2012. The sales moved up 20% to Rs. 2660.93 crore as compared to Rs. 2222.47 crore during the year-ago period. Sales growth is led by higher volumes owing to capacity additions coupled with demand pick up and improved prices. The company's despatches grew 9.8% to 6.09 metric tonnes versus 5.55 mt (YoY). Sales quantity and net sales for this quarter is highest ever in the history of the company. Operating profit jumped sharply about 23.14% at Rs. 772.09 crore. A comparatively good adjusted net profit growth of 45.12% to Rs. 591.35 crore was reported for the Q1CY12 compared to Rs. 407.48 crore of previous same quarter. During the quarter the company has changed its method of providing depreciation.

ACL has recorded a growth of 12.38% in their cement despatches for March 2012. Despatches have gone upto 2.178 million tonnes from the earlier 1.938 million tonnes clocked in March 2011 indicating increase in construction activities across sectors. The company has hiked cement prices in March, to pass through the 20% railways freight increase and also excise duty hike in the budget. Cement production increased by 9.1% compared to previous year-to 5.59 million tonnes.

Valuation

With strong market presence, growing volumes and capacity expansion plans, effective capacity utilization and price hikes and higher realizations; ACL is well on its growth trajectory. We believe Ambuja Cement Ltd. is trading at an attractive valuation at 16.15x and 13.21x of FY12EPS of Rs.10.20 and FY13EPS of Rs.12.47. We initiate a 'BUY' on the stock with a target price of Rs.210 (appreciation of about 27%) with the medium to long term investment horizon.

For full report, please click on the attachment.

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AmbujaCement_HemSecurities.pdf