Buy Ambuja Cement; target of Rs 628: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Ambuja Cement has recommended buy rating on the stock with a target price of Rs 628 in its research report dated January 30, 2025.

Broker Research

January 30, 2025 / 14:55 IST

Buy

26 Aug, 2025 12:21

Volume

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Prabhudas Lilladher's research report on Ambuja Cement

Ambuja Cements (ACEM) delivered weak operating performance in 3QFY25 despite achieving strong volume growth. Volumes grew 17% YoY to 16.5mt aided by MSA and recently acquired units (1.4mt). NSR declined 0.8% QoQ due to its adopted aggressive selling strategy and rising exposure to weak South market via Penna. EBITDA/t adjusting for the one-off receivable amount declined sharp 56% YoY to Rs537/t affected by a) Penna and Sanghi volumes (having higher fixed cost as both are operating under 40% utilization), b) higher store & spare cost at few older units which were under maintenance shutdown, c) higher RM costs coupled with lower NSR. Going forward, mgmt. aims to enhance efficiencies by increasing the green power mix, captive coal usage, and direct dispatches to customers, targeting a reduction in operating costs from c. Rs4,618/t to ~Rs3,650/t by FY28E, achieving savings of ~Rs1,000/t. ACEM expects to reach 104mtpa capacity by Q4FY25 post the Orient Cement consummation and 118mtpa with ongoing organic expansions, positioning it for a strong ~15% volume CAGR over FY24-27E.

Outlook

We expect ACEM revenue/ EBITDA/ PAT to deliver CAGR of 13%/20%/12% over FY24-27E. The stock is trading at EV of 14.6x/12.6x FY26E/FY27E EBITDA. Maintain ‘Buy’ with revised TP of Rs628 (Rs707 earlier) valuing at 17x EV of Sep’26E EBITDA.

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