Buy Ambuja Cements; target of Rs 630: Motilal Oswal

Motilal Oswal's research report on Ambuja Cements

The key highlights of ACEM’s FY25 annual report: 1) the company’s consolidated cement capacity has risen to 100.3mtpa currently from 76.9mtpa in FY24-end, primarily led by inorganic growth. However, most of the company’s organic grinding unit expansions are witnessing delays of around 6-12 months from the scheduled timeline; 2) various cost-saving measures, including group synergy initiatives, are currently underway but have yet to yield meaningful results; 3) it reported a sharp increase in related-party transactions, aimed at improving process efficiency and leveraging group synergies; and 4) projecting cement demand growth of ~7-8% YoY in FY26, led by strong demand from infrastructure, housing and commercial sectors.

Outlook

We maintain our BUY rating with a TP of INR 630 (valuing the stock at 18x FY27E EV/EBITDA).