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Technical Outlook

• Nifty Infra index hit the new high last month after 13 month’s consolidation and Ambuja has been key outperformer, with high relative strength

• Key observation has been that stock has given strong breakout in September from large rounding bottom and now placed on the cusp of past two month’s consolidation signalling inherent strength and provides entry opportunity

• We expect the stock price to extend its bull trend and head towards | 660 in a gradual manner as projected based on past 10 week’s trading range (585-480)

Fundamental Outlook

* Ambuja Cement (now Adani group conglomerate) is a large cement player with capacity of 31.5 MT spread across North (35%), South (24%), West (~20%), East (~21%) in India. It has a large marketing set-up & pan-India presence. The new management plans to increase consolidated capacity to ~140 MT in the next five years (i.e. at 16% CAGR). Keeping this in mind, the new board has approved fund infusion of | 20,000 crore by issuing warrants to promoter entity on a preferential basis

* The company is currently investing | 3,500 crore for expansion of 7.0 MT GUs across their existing units at Sankrail and Farakka and at a greenfield location at Barh, in Bihar, supported by a 3.2 MT brownfield clinker expansion at existing integrated plant in Bhatapara, Chhattisgarh. This will enhance its cement capacity by ~8.5 MT to 40 MT by Q4CY24. It has a strong balance sheet. Also, the group’s exposure into energy and logistics will help them to improve cost dynamics and gain supply chain efficiencies

* The termination of agreement with Holcim for payment of technology and know-how fees would lead to instant cost savings of 1% of revenues from Q4CY22 onwards

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