Religare Capital has maintained 'Buy' on Ambuja Cement (ACEM) after the company declared its third quarter results. The stock broker fixed price target at Rs 230.
Commenting on the results, Religare said, ''ACEM's Q3 PAT at Rs 1.5 billion came in below RCMLe (incl. DMF provisions of Rs 270 million for past quarters), down 36% year-on-year (YoY), while adj. EBITDA/t was higher at Rs 656 (RCMLe: Rs 614/t).''
Commenting on the investment rationale, the stock broker said, ''We tweak estimates to factor in lower realisation and volume growth in Q3CY15, and accordingly revise down our Sep’16 TP to Rs 230 from Rs 250, set at 12x one-year fwd. EV/ EBITDA.
We cut our CY15, CY16 and CY17 estimates by 10%, 10% and 5% to factor in lower volumes and realisations. While volume recovery is the key, the stock has corrected~18% from its peak over the last four months, thus pricing in most negatives. We think the company’s growth profile is likely to improve with utilisation levels in its key northern and western markets set to touch ~90% in the near-to-medium term. Maintain Buy.''
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