Even as Ambuja Cements reported a strong beat in earnings on most parameters, the cement maker’s scrip dropped about a percent on Wednesday after brokerage firms Citi and Credit Suisse downgraded their rating on the stock and cut their target price.

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Here's a look at brokerage ratings and target price:

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BofA Securities has also lowered its earnings before interest, tax, depreciation and amortization (EBITDA) per tonne estimate on Ambuja Cement's stock for 2022 by 9 percent and 2023 by 6 percent.

However, Credit Suisse sees EBITDA per tonne improving to Rs 1,150 in 2023 and to Rs 1,180 in 2024, from Rs 1,030 in 2022. This implies that the foreign brokerage firm sees realisation improving in the future. It has also revised its earnings estimate by factoring in higher energy costs in the near term.

According to Jefferies, the company may underperform industry growth in 2023.

At 10:28 am, shares of the cement manufacturer were trading 0.6 percent lower at Rs 368.60 on the BSE.

Here’s how the company performed during the quarter ended June:

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Citi said the company’s better-than-expected earnings were driven by lower costs while BofA Securities pointed out that the cement company’s volume growth remained healthy.

Neeraj Akhoury, CEO, Holcim India, and Managing Director & Chief Executive Officer, Ambuja Cements, said: "Ambuja has recorded robust volume growth of 15 percent, and top line growth of 18 percent" in the quarter. However, "the April to June 2022 quarter was impacted by rising fuel prices and related inflationary impacts," he said, adding, this was partly mitigated by improved efficiencies.

Meanwhile, Credit Suisse said that the company’s quarterly results and strong volume growth of 15 percent were in-line with expectations.

Further, cement prices continue to lag in catching up with elevated costs, pointed out Jefferies.

Citi believes that costs for the industry has peaked now. It also added that Ambuja Cements’ valuation should correct after the transaction with Adani Group.

Adani Group had announced that it would acquire Switzerland-based Holcim’s entire stake in Ambuja Cements and ACC through an offshore special purpose vehicle.

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