Emkay Global Financial Services has downgraded Ambuja Cements to reduce with target price of Rs 205 as against current market price (CMP) of Rs 239 in its report.

Commenting on the results, Emkay said, ''Ambuja Cements' (ACEM) result was above our estimates with EBITDA at Rs2.9bn against estimated Rs 2.3 billion and EBITDA/tn of Rs 591 against estimated Rs 445 led by lower opex (energy cost was down QoQ)  and higher realization (1.5% above estimates).

Sales volume remained muted at 5.1mt, down 7.8% YoY. Realization was up 1.1% YoY (but, down 1.6% QoQ) to Rs4,316/tn (our estimate: Rs4,250/tn). EBITDA/tn was at Rs591 against Rs551/Rs604 in Q4CY15/Q3CY16.

Commenting on the investment rationale, the stock broker said, ''The management remains optimistic on industry growth prospects led by government's focus on infrastructure and housing. However, absence of capacity expansion plans remain a concern for the company. Downgrade to reduce with SOTP based PT of Rs 205.​''

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