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Choice Equity Broking's report on Ambuja Cement

We forecast ACEM EBITDA to grow at a CAGR of 27.3% over FY25–28E, supported by our assumptions of volume growth at 12.0%/9.0%/9.0% and realisation growth of 1.5%/0.5%/0.5% in FY26E/FY27E/FY28E, respectively. We remain positive on ACEM, supported by the group’s strong presence in the cement sector and the recently announced merger of Sanghi Industries and Penna Cement with the parent company, Ambuja. Over the medium to long term, management may look to consolidate all its cement entities under a single platform, which in our view would be a significant rerating event for Ambuja. At this stage, consistent focus on cost reduction, targeting a higher share of premium products, and focus on capacity expansion are positive, while a not-so-straightforward corporate structure is a drag.

Outlook

We maintain our BUY rating but increase our TP to INR625 as we factor in 1) INR300/t cost reduction benefit over FY25-28E due to higher share of renewable energy, railroad mix optimization that drives reduction in lead distance, 2) increase in premium product share that drives better realisation, 3) turnaround and consolidation of Sanghi, Penna, Orient Cement assets.

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Ambuja Cement - 30042025 - choice

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