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Ambuja Cement – Management sees gradual recovery in industry utilization rates

ICICIdirect Research 04 Jul 2025 DISCLAIMER

At the recent plant visit organized by the company, Ambuja’s management reiterated its optimistic stance on cement sector in the coming years, led by improving demand-supply dynamics.

After witnessing a muted ~4% demand growth in FY25, the management expects cement demand at ~7% CAGR over the next 4-5 years as compared to supply CAGR of ~6% over the same period. This will help the industry in gradual improvement in capacity utilization rate (currently at 65%). With recovery in utilization rates, cement prices are also likely to improve in the coming period.

On the company front, Ambuja is on track to expand its capacity to 140 mtpa by FY28E (from 103 mtpa at present). The company is also aiming for 20% market share by FY30E from 14.5% at present.

On the profitability front, company targets significant improvement in EBITDA/ton to Rs 1500/ton by FY28E from Rs 789/ton in FY25. This will be mainly driven by focus on increasing share of premium products and reduction in total cost by ~Rs 500/ton by FY28E through operational efficiencies across cost line items like power & fuel, freight and raw materials.

Company has also started the process of consolidating all its cement operations under a single entity as part of its “One Business One Company” strategy, which will further optimise costs and simplify operations.

We estimate revenue CAGR of 15% and EBITDA CAGR of 30% over FY25027E, led by volume CAGR of ~14% with EBITDA/ton improvement by ~Rs 400/ton over the same period.

We maintain Buy on Ambuja Cements with a target price of Rs 690.

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