Buy Ambuja Cement; target of Rs 685: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Ambuja Cement has recommended buy rating on the stock with a target price of Rs 685 in its research report dated August 01, 2025.

Broker Research

August 04, 2025 / 11:22 IST

buy

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Ambuja Cement

Ambuja Cements (ACEM) delivered strong consolidated operating performance in Q1FY26 with 20% YoY volume growth (18.4mt excluding clinker volume), aided by higher government capex and recently acquired assets. NSR improved by 5% QoQ, aided by an uptick in cement pricing during the quarter. RM costs declined on lower purchase of goods, which resulted in ACEM delivering EBITDA/t of Rs1,066. ACEM has successfully integrated the brands of Penna and Orient into ACEM. The capacity utilization for acquired assets stood at ~77-78% as per mgmt. ACEM would utilize Penna and Sanghi clinker units for feeding grinding units across regions. ACEM maintained its long-term efficiency gain target of Rs500/t through long-term supplier agreements, group supply chain synergies, operational efficiencies, and improvement in green power, and this is despite the acquisition of Orient.

Outlook

We expect ACEM to deliver an EBITDA CAGR of 35% over FY25–27E. The stock is trading at EV of 17.5x/13.1x FY26/27E EBITDA. Maintain ‘Buy’ with revised TP of Rs685 (Rs690 earlier) valuing at 17x EV of Mar’27E EBITDA.

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