Ambuja Cements

Analysts have adopted a more cautious near-term outlook on Ambuja Cements due to softer industry demand and persistent cost pressures. The target price was revised downward to ₹570/share from ₹660/share, reflecting concerns around slower cement industry growth of around 5% in FY27E and a weak pricing environment that limits the company’s ability to pass on rising costs. Additionally, the integration of Sanghi Cement and Penna Cement is expected to weigh on near-term profitability due to lower utilisation levels and higher-than-expected maintenance capex. Despite near-term challenges, brokerages continue to maintain a positive long-term stance on ACEM. The company plans to add nearly 10 MTPA of capacity in FY27E, taking total cement capacity closer to 119 MTPA by H1FY27. Ambuja has also completed the consolidation of Sanghi and Penna Cement into a unified platform, which is expected to improve operational efficiency over time. Analysts expect EBITDA to grow at a CAGR of 20.7% between FY26 and FY29, supported by strong volume growth assumptions and gradual improvement in realisations.

Ambuja Cements reported Q4FY26 revenue of ₹10,915 crore, up 9.4% YoY, while EBITDA declined 21.6% YoY to ₹1,463 crore. Cement volumes increased 7.5% YoY to 20.1 million tonnes, reflecting healthy demand traction. However, profitability remained under pressure as total cost per tonne rose 8.4% YoY due to higher fuel prices, diesel costs, packaging shortages, and rupee depreciation linked to the ongoing West Asia crisis. As a result, EBITDA per tonne fell sharply to ₹728/t. The company continues to focus on premiumisation and cost optimisation to protect margins. Premium products now account for 36% of trade sales and delivered strong 22% YoY growth in Q4FY26. At the same time, the share of renewable energy in operations increased to 32%, up from 26% a year ago. Management expects cost savings of ₹150–200 per tonne in FY27 through greater use of fly ash and green energy initiatives. Management has warned that cost headwinds from the West Asia crisis are likely to continue into H1FY27, especially due to elevated fuel and logistics expenses. Analysts estimate additional cost inflation of ₹120–150 per tonne in Q1FY27. Prolonged geopolitical disruptions could further increase petcoke prices and pressure margins, making cost control a critical factor for future profitability. While Ambuja Cements faces short-term profitability pressures, investors continue to focus on its long-term expansion strategy, operational consolidation, and efficiency improvements. Capacity additions, rising premium product share, and renewable energy adoption provide strong structural support, even as the company navigates a challenging pricing and cost environment.