InvestorQ : How do I approach the Ambuja Cement stock after its latest quarterly results?
Rashi Mehra made post

How do I approach the Ambuja Cement stock after its latest quarterly results?

Answer
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sarah Leo answered.
1 year ago


India’s second largest cement maker, Ambuja Cements, has actually announced much better than expected results for the March quarter. The total income was up by 8.4% to Rs.6546 crore while the net profits for the quarter were up by 35% at Rs.693 crore. Ambuja Cements follows a Jan-Dec accounting year as compared to Apr-Mar for most others.

Growth in top line and bottom line

Ambuja Cements saw some positive traction on the sales revenues and also on profits. Cement volumes were up by 2.4% at 6.37 million tonnes in the March quarter. In fact, there was bigger growth seen in the higher margin high-end products of the company.

Should you buy Ambuja Cements at current prices?

Considering the government planning huge investments in infrastructure, Ambuja should be an obvious beneficiary. Also the last few months have seen pricing power coming back to the cement companies and that is also favourable. But how are the valuations? At the current market price of Rs.220, the stock already quotes at over 30X rolling quarter earnings. That is nearly twice the valuation at which the sector quotes. Also, the stock has traditionally quoted in a narrow range and one can look at buying this stock more as a market performer in the coming months.