Buy Ambuja Cements; target of Rs 730: Motilal Oswal

Motilal Oswal's research report on Ambuja Cements

Ambuja Cements (ACEM) posted higher-than-estimated EBITDA, driven by higher-than-estimated realization (3% above estimate). Consol. EBITDA increased 53% YoY to INR19.6b (~8% beat), and EBITDA/t surged 27% YoY to INR1,066 (estimated INR1,002). Adj. PAT after MI grew ~15% YoY to INR7.3b (in line). Management indicated strong demand and pricing outlook, with cement demand estimated to grow ~7-8% YoY in FY26 (vs. ~6-7% earlier). The cement price improved in 1Q, and it will continue to follow a good pricing discipline. It is committed to achieving a total cost reduction of INR530/ton, with ~35-40% of the target already realized. The capacity expansion remains on track, with grinding capacity standing at 104.5mtpa currently, and another ~13mtpa will be commissioned in the remaining 9MFY26.

Outlook

We estimate its EBITDA/t to increase to INR1,014/INR1,150/INR1,230 in FY26/FY27/FY28 vs. INR794 in FY25. ACEM (consol.) trades fairly at 21x/17x FY26E/FY27E EV/EBITDA and USD158/USD151 EV/t. We value the stock at 20x Jun’27E EV/EBITDA to arrive at our TP of INR730. Reiterate BUY.