Target: ₹680
CMP: ₹462.30
We interacted with Ambuja Cements’ management during a visit to its Sanghipuram plant arranged by the company. The Management highlighted that overall demand momentum remains healthy which has aided cement price recovery. Opex is also expected to reduce q-o-q driving margin stabilisation. Focus remains on profitable growth over aggressive organic expansion, achieving cost reduction targets and selling more premium cement.
During the Sanghipuram plant visit, management showcased the ongoing plant infrastructure revamp which is reducing the plant opex (more in the offing) and also noted its potential to double the plant capacity in near future. We remain positive on Ambuja, which we expect to deliver about 100-200 bps volume growth ahead of the industry each year over FY26-28E, accompanied by a gradual margin improvement driven by opex reduction.
We trim our EBITDA estimates for FY26/27/28E by 2/5/6 per cent, owing to two factors: about 2 per cnet reduction in our volume CAGR assumption, and lower margin estimates to account for an expected rise in fuel costs. We also trim our capex outgo estimates for FY26-28E to ₹33,200 crore from ₹37,000 crore earlier, as we build in a slower pace of capacity additions given management’s stated focus on margins over aggressive expansion.
We maintain Buy with a revised target price of ₹680/share (16.5x its Mar’28E consolidated EBITDA). Previous target price was ₹700.