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Ambuja Cements: Longer-term growth outlook remains intact

ICICIdirect Research 01 Aug 2025 DISCLAIMER

Consolidated revenue was up ~24% YoY in Q1FY26, mainly led by ~20% YoY volume growth which was supported by consolidation of acquired entities (Sanghi Industries, Orient Cement and Penna Cements). Organic volume growth (excluding volumes from acquired entities) also stood at ~13% YoY, which was much better than the industry growth.
Blended realisation also improved by ~3% on both YoY and QoQ basis.
EBITDA/ton improved to Rs 1066/ton (+27% YoY), mainly led by better realisations and cost efficiency measures across power & fuel and freight cost.
Management maintains its guidance of double-digit volume growth (vs industry growth of 7-8%) with further Rs 350/ton reduction in total cost in the coming years. With improvement in pricing and cost efficiencies, company targets to reach EBITDA/ton of Rs 1500/ton in the next 2-3 years.
Company is on track to expand its capacity to 118 mtpa by FY26E (from 105 mtpa at present) and targets to reach 140 mtpa by FY28E. Company aims to improve its pan-India market share to 20% by FY30E (from 14.5% at present).
Over FY25-27E, we expect company’s EBITDA to grow ~30% CAGR led by ~14% volume CAGR and ~Rs 400/ton improvement in EBITDA/ton.
Valuations look attractive considering the scale of operations, diverse market-mix, significant growth capex with incremental return on capital and lower earnings volatility. We maintain Buy with a target price of Rs 700.

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