Buy Ambuja Cements; target of Rs 480: Choice Institutional Equities

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • Volume growth recovery: Expected higher single-digit YoY volume growth in H2FY27, driven by better demand and accelerated trade volumes.
  • Structural cost optimization: Management aims to achieve a cost target of INR 4,250/t by FY27, supported by manufacturing efficiency, logistics optimization, and renewable power.
  • Premiumization-led realization improvement: Premium products accounted for 37% of trade sales, up 2 percentage points YoY, driving realization improvement.
  • Capacity expansion and operating synergies: Ongoing commissioning and ramp-up of grinding capacity, planned addition of ~30 MTPA cement, and proposed merger of ACC and Orient Cement to drive growth.

Thesis Validation Checklist

  • Volume growth: Watch for volume growth ahead of industry expectations in H2FY27, supported by accelerated trade volumes and calibrated institutional sales.
  • Cost optimization: Monitor management's ability to achieve the cost target of INR 4,250/t by FY27, driven by manufacturing efficiency and logistics optimization.
  • Premiumization: Track the increase in premium products' share of trade sales, driving realization improvement.
  • Capacity utilization: Observe the progress of capacity expansion and operating synergies, including the commissioning and ramp-up of new capacities.