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Cementing vision for FY28

We recently interacted with the management of Ambuja Cements during a visit to the Marwar Mundwa plant in Rajasthan. The key takeaways from the interaction are: (1) the company reiterated its cement capacity expansion targets of 118mt by FY26 and 140mt by FY28 (from ~103mt currently); (2) it aims to enhance market share from ~14% currently to 17–18% by FY28 and over 20% by FY30; (3) it has a cost reduction target of INR 500– 550/tn, bringing cost/tn down to INR 3,650 by FY28; and (4) the long-term strategic focus is on integrating operations under its “One Business, One Company” vision. We maintain our BUY rating on Ambuja Cements with a Mar’26 target price of INR 635/share, based on 18x FY27 EV/EBITDA. We continue to like the company for its strong pan-India presence, dominant market position, industry-leading volume growth, and robust balance sheet.

* Targeting clinker/cement capacity of ~107mt/140mt and 17–18% market share by FY28: Since the acquisition of Holcim’s stake in Sep’22, Ambuja Cements has expanded its cement capacity by over 35mt (>50%), with ~28mt (~80% of the addition) coming through the inorganic route. This has taken the group’s total capacity >100mt milestone. The company remains committed to its aggressive expansion strategy, targeting cement capacity of 140mt and clinker capacity of ~107mt by FY28. Of this, ~16mt is currently under execution, with plans to add another 21mt. The planned capacity additions are expected to come at a competitive capital cost of USD 75–80/tn. Ambuja’s current capacity market share is ~14%, which it aims to lift to ~15% by FY26 and to 17–18% by FY28 and over 20% by FY30.

* Reaffirms cost optimisation target to achieve INR 3,650/tn by FY28: Ambuja Cements reiterated its cost reduction roadmap, aiming to lower cost/tn by INR 500–550 to INR 3,650/tn by FY28. Key levers include: (1) savings of INR 280–300/tn in power and fuel costs, driven by scaling up green power capacity from 375MW to 1GW by Jun’26 (targeting ~60% of power requirement from green sources by FY28 vs. 23% in FY25) and increasing AFR usage to 27% by FY28 (from 9% in FY25); (2) logistics savings of INR 100/tn through network optimisation, reduction in lead distance, and increasing the share of sea logistics by 500bps to 10%; (3) raw material savings of INR 100/tn via long-term tie-ups for fly ash and slag; and (4) overhead and administrative savings of INR 50–100/tn. A significant portion of these savings is expected to materialise from FY27 onwards. Premium products contribute ~30% of trade sales and it is targeting 50% share in the near term. These products generate an EBITDA premium of ~INR 400/tn. The management has reaffirmed its guidance of achieving EBITDA/tn of INR 1,500 by FY28.

* “One Business, One Company” strategy driving portfolio consolidation: The Adani Group is actively consolidating its cement operations under a unified structure. The ongoing mergers of Sanghi Industries and Penna Cement are expected to be completed by 3QFY26. A potential merger between Ambuja and ACC remains under consideration. The recent acquisition of Orient Cement was executed smoothly, with no disruption to volumes—around 60% of Orient’s dealers have already begun selling Ambuja and ACC products.

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