Technically, for Ambuja Cement (CMP:222), immediate good support zone is around 220-214 & sustain above 225, it may target 229-233 immediately. Consecutive closing above 233, it may scale 238-241-245 & 252-261-266 in the short to medium term. In the long term, sustain only above 266, Ambuja Cement may reach 287-305-335 area under bullish market scenario (FY:16-18).
On the downside, consecutive closing below 214-212, it may fall to 209-204-200-194-191 & sustain below 191, it may further fall to 185-178-170-162 area in the under worst bear case scenario.
In brief, 214-220 may be good demand (support) zone & 245-266-287 zone might be moderate to heavy supply (resistance) zone in the near term.
Bottom Line : Technical Trading Levels (Positional)
| SL</>2 | FROM SLR | |||||||||
| AMBUJACEM | CMP | 222 | ||||||||
| T1 | T2 | T3 | T4 | T5 | T6 | T7 | SLR | |||
| Strong > | 214 | 218-220* | 225-229 | 233-238* | 241-245 | 252 | 261 | 266-287 | <212 | |
| Weak < | 212 | 209-204* | 200 | 194-191* | 185 | 178 | 170 | 162 | >214 | |
Majority of all the cement stocks has underperformed the broader market in the last one month amid disappointments of Q4 earnings led by lower realisations & abrupt drop on sales volume. This is mainly due to slowdown in demand from rural India, poor offtake in infra projects, unseasonal rains in Feb/March in many parts of Northern India etc & Ambuja Cement also was no exception.
It could be noted that rural housing makes almost 40% of total cement demand in India and possibility of weak rural economy this year because of poor monsoon forecast by IMD affected the cement stocks further.
But, as of now, progress & distribution of monsoon so far is quite satisfactory against the IMD projection and rural economy might not be affected too much because of monsoon this year. Also, MSP increase by the Govt. may help the rural economy to a great extent. Demand may pick up sequentially higher after the current lean monsoon sessions for cement industry.
Looking ahead, expected uptick of demand from better infrastructure with road projects and pick up in urban & rural affordable housing may offer some triggers for cement industry. Southern cement companies might see see more demand on the back of infra thrust in new state of Telengana. With overall expectation of visible uptick in economic activity by H2/FY-16, cement industry and Ambuja Cement may offer substantial positive return in the days ahead.
As par BG metrics, current median valuation of Ambuja Cement may be around 218 & its projected fair value might be around 235-266-305 (FY:16-18) in the current market parameters.
| SCRIP | EPS(TTM) | BV(Act) | P/E(AVG) | LONG TERM | SHORT TERM | MEDIAN VALUE | 200-DEMA | 10-DEMA |
| AMBUJACEM | 8.34 | 65.11 | 25 | 220.49 | 215.40 | 217.94 | 233.16 | 222.52 |
| AMBUJACEM | 9.65 | 69.05 | 25 | 237.17 | 231.70 | 234.43 | 233.16 | 222.52 |
| AMBUJACEM | 12.5 | 75.95 | 25 | 269.93 | 263.70 | 266.82 | 233.16 | 222.52 |
| AMBUJACEM | 16.25 | 83.6 | 25 | 307.77 | 300.66 | 304.22 | 233.16 | 222.52 |
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