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Motilal Oswal Report
Domestic brokerage firm Motilal Oswal Financial Services has maintained a ‘Buy' rating on Ambuja Cements Ltd., reiterating a bullish stance on the stock backed by strong long-term demand visibility and the Adani Group's aggressive infrastructure push.
The brokerage has set a target price of Rs 530, implying a potential upside of around 24% from the current market price of Rs 426.
Motilal Oswal highlighted that the cement demand outlook remains positive for the medium to long term, given the higher government spending on the infrastructure and residential segments. However, cost pressure and subdued cement price hikes are likely to remain key challenges in the near term.
The brokerage believes Ambuja Cements' change in brand perception remains a long-term journey as most industry players continue to focus on increasing and maintaining their higher premium cement share. The company's premium cement share stood at ~36% of trade sales in Q4 FY26 versus ~29% in Q4 FY25.
While lead distances remain elevated due to the concentration of limestone mines in select areas, clusters, companies are mitigating this through split-location grinding units, optimising scale operations, and increasing direct dispatches.
The brokerage estimates a revenue/Ebitda/PAT CAGR of ~11%/18%/19% over FY26–28, led by healthy volume growth and gradual improvement in realisations.
While near-term challenges such as cost pressures and muted pricing trends may persist, the brokerage believes operational efficiencies, including improved logistics and expanded capacity, will support margins over time.
Motilal Oswal also noted that the ongoing industry transition, where cement may gradually shift from a branded product to a more commodity-like offering could unlock higher penetration and demand in the long run, further strengthening the growth outlook.
Overall, despite near-term margin headwinds, the brokerage remains constructive on Ambuja Cements, citing strong structural demand, capacity expansion, and long-term profitability improvement as key drivers behind its bullish call.
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