Ambuja Cements' standalone profit, revenue and margin for the January to March 2023 quarter came in higher than CNBC-TV18 poll projections, yet global brokerage Morgan Stanley believes the company's near-term growth shall remain low.

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The total sales volumes of the cement maker, which is now part of the Adani Group, at 8.1 mt for the quarter too beat poll estimate of 7.65 mt. Ambuja Cements CEO Ajay Kapur said the company reported a “strong performance” driven by strategic initiatives on business excellence, operational efficiencies and synergies.

However, on a consolidated basis, its sales volume declined 2 percent to 14.1 mt in the January-March quarter. It was 14.4 mt in the corresponding quarter. It also reported a decline of 10.87 per cent in its consolidated net profit at Rs 763.30 crore for the fourth quarter of the fiscal.

Here’s what brokerages make of Ambuja Cements Q4 Results

Morgan Stanley said the company’s earnings before interest, taxes, depreciation, and amortisation, or EBITDA was in-line while revenue was slightly better, offset by higher opex.

The analyst believes Ambuja Cements’ medium-term expansion plans are intact, but near-term growth shall remain low. It expects profitability to improve with group synergies playing out.

Following the March quarter result, CLSA reiterated its guidance of Rs 300-400/t EBITDA. It expects improvement in FY24 and doubling of capacity over the next five years. The brokerage of the view that lower costs lead to sequential rise in profitability. It has also factored in a nine percent volume CAGR over FY23-26 and EBITDA/t CAGR of 15 percent.

Nuvama said that like its subsidiary ACC, Ambuja Cement, too delivered an impressive margin recovery (300bp) on a quarter on quarter basis. It added that as volumes grew eight percent YoY, cost control measures (including synergies with ACC) led to cost per tonne coming off 6 percent sequentially.

Also Read: Here’s why it is imperative for cement industry to take adequate price hikes this quarter

The group has planned a capex of Rs 72 billion in FY24 towards capacity enhancement (26MT) and process optimisation over the next few years and it is also targeting INR300–400/t improvement in EBITDA in the fiscal through cost optimisation, the brokerage pointed out.

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