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Motilal Oswal Report
Motilal Oswal remains positive on Ambuja Cements Ltd. as the company sharply scales up its long-term expansion roadmap and shifts decisively toward organic growth. The brokerage reiterated its Buy rating with a target price of Rs 600, valuing the stock at 17x FY28E EV/Ebitda.
Ambuja Cements now targets a cement capacity of 115 million tonnes per annum by FY26, rising further to 130–132 MTPA by FY27 and a revised 155 MTPA by FY28, higher than its earlier goal of 140 MTPA. The additional 15 MTPA is expected to come from low‑cost debottlenecking at just $48 per tonne, giving it one of the most cost‑efficient expansion pipelines in the sector.
Clinker capacity is also projected to reach 96 MTPA by FY28, significantly higher than the previously planned 84 MTPA. FY26 marks the beginning of a major organic expansion phase, with multiple new grinding units scheduled for commissioning.
A key strategic lever is the proposed “One Cement Platform” merger involving ACC, Orient Cement, and Ambuja Cements, subject to regulatory approvals. The consolidation into a single listed entity is aimed at improving scale efficiencies, logistics, capacity mix, and overall profitability.
Motilal Oswal estimates a strong earnings trajectory for FY26–28, projecting consolidated revenue/Ebitda/PAT CAGRs of ~11%/17%/26%, respectively.
Ebitda per tonne is forecast to rise to Rs 1,048 in FY27 and Rs 1,105 in FY28, compared with Rs 976 estimated for FY26.
On the valuation front, Ambuja Cements (consolidated) currently trades at 18x/16x/14x FY26E/FY27E/FY28E EV/Ebitda and $128/118/112 EV per tonne, levels the brokerage views as attractive given its accelerated capacity expansion and improving profitability outlook.
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