Top Conviction Ideas : Buy Ambuja Cements Ltd for Target Rs. 660 - Axis Securities Ltd
* The company is expanding its capacity from the current 104.5 MTPA (including 8.5 MTPA of Orient Cement) to 118 MTPA, with the ongoing expansion set to be completed in phases over FY26.
* The company is exploring further growth opportunities to achieve a combined capacity of 140 MTPA by FY28. This expansion is expected to support its sustained growth momentum. Volume and revenue are projected to grow at CAGRs of 11% and 12%, respectively, over FY24-FY27E.
* Business initiatives are expected to further lower operating costs by reducing the clinker factor and logistics costs, improving the sale of blended cement, and expanding the EBITDA margins. We forecast the company’s EBITDA margins to improve to 20%-21% in FY27E.
* Strong infrastructure demand and ongoing needs from the housing and commercial sectors are anticipated to boost cement demand in FY26. Strategic investments in roads, railways, and urban and commercial amenities are poised to drive robust growth. The company expects demand for the industry during FY26 to grow in the range of 7-8%.
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