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Ambuja Cements – Operational performance was below expectations

ICICIdirect Research 08 May 2026 DISCLAIMER

Sales volume grew 7.5% YoY during Q4FY26 was largely in-line with expectations. On full year basis, volume growth remained strong at ~15% YoY, mainly led by consolidation of Orient Cement and Penna Cement. The overall operational performance has been below expectations as EBITDA/ton declined by 27% YoY to Rs 728/ton in Q4. This was mainly on account of higher other expenses which increased by 48% YoY (due to higher branding expenses and increase in repair & maintenance cost in acquired assets).  Full year EBITDA/ton stood at Rs 874/ton (+11% YoY), lower than estimate of Rs 951/ton
Management stated that overall cost structure has remained higher than their earlier guidance as the expected improvement in operational efficiencies in acquired assets (mainly Sanghi Industries and Orient Cements) has been delayed. However, management guides Rs 250/ton annual reduction in overall cost/ton in FY27E and FY28E, led by increase in green energy share and cost reduction from raw material and lead distance optimisation. Price hike of Rs 10-15/bag has also been taken to mitigate the recent increase in costs (mainly fuel and packaging), though sustainability of these price hikes needs to be monitored over the coming days
On volume growth front, management guides 8-9% YoY growth in FY27E as against earlier guidance of double-digit growth. Capacity target of 155 mtpa by FY28E has also been deferred to FY30E as focus is shifted towards increasing utilization of existing capacities
Though we estimate overall operational performance would improve by FY28E, we have reduced our absolute EBITDA estimates by 23-24% for FY27E and FY28E, factoring in higher-than-expected costs
We have maintained HOLD rating on Ambuja Cements with revised target price of Rs 480

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