Buy Ambuja Cement; target of Rs 474: Prabhudas Lilladher

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • Ambuja Cement's management expects volumes to grow ahead of the industry in H2FY27, supported by stronger trade volumes, ramp-up of new capacities, and calibrated institutional sales.
  • The company has already realized a price hike of ~INR10/bag in October, with further hikes expected over the coming months.
  • ACEM is working on structural cost levers, including a cost-reduction roadmap, improving efficiencies at acquired assets, and ramping up recently commissioned capacities.
  • The company targets a capacity of 149mtpa by FY28 and 155mtpa by FY30, with a focus on profitable markets and strong brand equity.

Thesis Validation Checklist

  • Investors should watch for volume growth, particularly in trade sales, and the ability of the company to maintain its value-over-volume strategy.
  • The success of the cost-reduction roadmap and the impact of higher fuel costs on profitability will be key factors to monitor.
  • Any changes in the competitive landscape, including new capacity additions or pricing trends, could affect Ambuja Cement's performance.
  • The progress of the company's expansion plans, including the announced 30mtpa expansion program, will be crucial in achieving its growth targets.