Ambuja Cements: Will Gain Strength Only Sustaining Above 202-206

For Ambuja Cements, only consecutive closing above 202-206 zone, 

Near term target may be 221-231;

Otherwise,  it can fall to 188-185 zone;

And sustaining below that 170-150 may be the near term target

With actual TTM EPS at 5.21 and average yearly EPS for the last five years at 7.95

The fair value of the stock may be 165-175 (at PE of 25) in the current market scenario

Trading idea:

CMP: 194

Either sell below 198 or on rise around 202-206;

TGT: 185*-170-150*-140 (1-12M)

TSL> 210

Note: Consecutive (3 days) closing above 210 for any reason, Ambuja may rally up to 215/221-231 and 250-275-295 in the short to long term (alternative bullish case scenario from the current trading levels).

For Ambuja, current TTM EPS is now 5.21 and going by the previous quarterly trend Q4FY16 TTM EPS may be reported at around 4.50. 

Average yearly EPS for the last five years is at 7.95. There are some forward projections of its EPS at around 8.75-11.45 (FY:16-18), which may be too much optimistic and on the higher side, even if there is a sudden miracle of overall economic recovery in India and massive spending by the Govt into infra and affordable housing push. In that case, projected EPS of 8.75-11.45 will be 95-150% higher from the likely Q4FY16 TTM EPS of around 4.50 too !!

As par BG metrics & current market scenario:

(based on actual TTM & projected FWD EPS)

Current median valuation of Ambuja may be around: 160 (FY:15/TTM) 

Projected fair valuations might be around: 165-175 (FY:16-18/FWD)

SCRIP	EPS(TTM)	BV(Act)	P/E(AVG)	Low	High	Median	200-DEMA	10-DEMA
AMBUJACEM	5.21	70.31	25	165.37	159.36	162.36	209.95	194.98

AMBUJACEM

4.5

74.95

25

153.69

148.11

150.90

209.95

194.98

AMBUJACEM

5.2

79.55

25

165.21

159.21

162.21

209.95

194.98

AMBUJACEM

6.01

84.75

25

177.61

171.16

174.38

209.95

194.98

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