Buy Ambuja Cements; target of Rs 740: Motilal Oswal

Motilal Oswal's research report on Ambuja Cements

Ambuja Cements (ACEM) reported strong growth of ~81% YoY in EBITDA to INR17.6b (~28% beat, led by lower-than-estimated opex/t). EBITDA/t grew ~52% YoY to INR1,042 (vs. estimate INR847) and OPM was up 6pp at ~19% (+3.7pp vs. our estimates). Adjusted profit (after MI) was up ~14% YoY at INR5.6b (+35% vs. our estimate). We raise our EBITDA estimate by 10% for FY26, considering outperformance in 2Q, and ~3% for FY27/28E (each). The stock is currently trading at 16x/14x FY27E/FY28E EV/EBITDA. We value the stock at 20x Sep’27E EV/EBITDA to arrive at our TP of INR740. Reiterate BUY.

Outlook

We estimate its EBITDA/t to increase to INR1,154/INR1,230 in FY27/FY28 vs. INR1,043 in FY26E. ACEM (consol.) trades at 16x/14x FY27E/FY28E V/EBITDA and USD138/USD128 EV/t. We value the stock at 20x Sep’27E EV/EBITDA to arrive at our TP of INR740. Reiterate BUY.