Whalesbook
1. THE SEAMLESS LINK
This outlook from Choice Institutional Equities arrives as Ambuja Cement continues to execute strategic initiatives aimed at enhancing its operational efficiency and market standing. The brokerage's decision to maintain a constructive stance is built upon the company's identified avenues for significant cost reduction and its aggressive capacity expansion plans, which are expected to drive future earnings growth.
The Core Catalyst
Choice Institutional Equities has reaffirmed its 'Buy' recommendation on Ambuja Cement, setting a revised one-year forward target price of ₹660 per share, a decrease from the earlier ₹700 target. This positive outlook is underpinned by an expected cost reduction benefit of ₹300 per tonne between FY25 and FY28E. A substantial portion of these savings, estimated at ₹150 per tonne, is anticipated from improved logistics, achieved by reducing lead distances and increasing the utilization of sea and rail transport. The company's strategic focus on increasing its share of premium products is also expected to bolster realization. As of late January 2026, Ambuja Cement's shares traded in the ₹510-₹536 range, with a market capitalization nearing ₹1.27 lakh crore.
The Analytical Deep Dive
The Indian cement industry is projected to sustain its growth momentum, with forecasts indicating a 7-8% expansion in FY26, driven by government housing initiatives and infrastructure development. Ambuja Cement is actively participating in this growth, planning to increase its capacity to 115 million tonnes per annum (Mnt) by the end of FY26E and further to 155 Mnt by FY28E, an upward revision from its previous target of 140 Mnt. This expansion is occurring against a backdrop of significant industry capacity additions, with over 175 Mnt slated for FY26-28, which could potentially pressure realizations.
Recent financial disclosures for Q3 FY26 reveal a company in robust operational health. Ambuja Cement reported a total cement capacity of 109 MTPA, with 2.4 MTPA added from the Marwar Grinding Unit. The company's EBITDA per tonne stood at ₹718 in Q3 FY26, marking a 31% year-on-year increase, with margins at 13.2%. Furthermore, Ambuja Cement is making strides in sustainability, being selected for the first Indo-Swedish Carbon Capture and Utilization pilot project and adopting the Taskforce on Nature-related Financial Disclosures (TNFD) framework. The ongoing amalgamation with ACC Limited and Orient Cement Limited aims to create a unified 'One Cement Platform,' fostering long-term value creation. Competitors like UltraTech Cement are also expanding, with a global capacity of 194.06 mtpa, positioning it as the second largest globally by capacity. ACC, also part of the Adani Group, reported a 22% revenue increase in Q3 FY26, driven by record sales volumes and premium product focus.
The Future Outlook
Choice Institutional Equities forecasts Ambuja Cement's EBITDA to grow at a compound annual growth rate (CAGR) of 13.5% between FY25 and FY28E. This projection is supported by volume growth assumptions of 12.0% in FY26E, followed by 8.0% in FY27E and FY28E, alongside realization growth estimates of 4.0% in FY26E and 0.5% for the subsequent two fiscal years. The brokerage now values Ambuja Cement using an Enterprise Value to Capital Employed (EV/CE) framework, assigning a multiple of 2.4x for FY27E and FY28E. Management anticipates the broader cement industry will experience 7% to 8% growth in FY26E. Dolat Capital, another analyst firm, has also upgraded Ambuja Cement to 'Buy' with a target price of ₹617, citing favorable valuations after a recent stock correction and projecting EBITDA per tonne to improve significantly by FY28E.