Ambuja Cement- 9% upside

Research Report on Ambuja Cement – November 2025

by ICICI Securities
Analysis – November 2025
Sector: Cement
Price on Analysis date: Rs. 577
Target Rs. 631
(25% Upside potential)

Ambuja Cements (ACEM’s; consol.) Q2FY26 performance has several unique peculiarities – 1) EBITDA/t stood flat QoQ vs. ~20–25% drop reported by cement majors. 2) EBITDA margins, at 19.2%, came in 340bps higher vs. industry leader UltraTech Cement. Margins trailed ~150bps in the past two quarters. 3) Further, the demonstrated cost control (both fixed and variable) compels us to keep our FY26E/FY27E EBITDA broadly unchanged, despite the bleak near-term cement price outlook (amid the ongoing GST rate-cut transition phase). For several cement peers, the weak pricing outlook has warranted earnings cuts. Lastly, the announcement of 15mtpa capacity de-bottlenecking (by FY28, at a mere USD 48/t) and scope for further de-bottlenecking appears impressive. Given the multiple positives, we continue
to value ACEM at 17x FY27E EV/EBITDA and maintain ADD with an unchanged TP of INR 631

Performance par excellence
ACEM’s Q2FY26 EBITDA (at INR 17.6bn, up 58% YoY/down 10% QoQ)
overshot our estimate by 20%. Highlights: 1) Volume surged 20% YoY riding
on acquisition benefits (of Sanghi Inds., Penna Cement and Orient Cement);
being ~1% ahead of forecast. 2) Realisation slipped 2% QoQ (vs. our 1.5%
estimate). 3) With the burgeoning share of green power (from 28% to 33%
QoQ) and lead distance optimisation, variable cost/t eased 3% QoQ (being the
fifth consecutive quarter of decline). 4) ACEM kept a tight leash on fixed cost
too, with staff cost easing 3% QoQ and ‘other expenses’ shrinking 6.5% QoQ.
EBITDA/t, at INR 1,061 (up 36% YoY/flat QoQ), came in 19% ahead of our
estimate (vs. INR 914/t reported by industry leader UltraTech Cement).

Faith intact; maintain ADD
Despite the near-term haze on cement price outlook, our FY26E/FY27E EBITDA
stays broadly unchanged, mainly owing to the demonstrated cost control in
Q2FY26 and management’s guidance of it rationalising further. ACEM has
revised up its FY28 cement capacity target to 155mtpa (from 140mtpa) with
a capacity de-bottlenecking announcement of 15mtpa. While this shall be
pursed across 13 locations under phase-I, ACEM is likely to pursue debottlenecking projects at other locations too (including those for clinker). While
sustainability of such industry-superior margins remains vital, our faith in
ACEM remains intact. We continue to value the stock at 17x FY27E EV/EBITDA
and maintain ADD with an unchanged TP of INR 631.

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