India’s cement sector, the world’s second-largest producer, boasts an annual capacity of 500 million tonnes (MT). With over 210 large cement plants and 350 mini plants, it contributes around 8% to global production. The sector, growing at 6-7% annually, underpins India’s infrastructure and real estate development.
With a market capitalization of Rs 1.66 lakh crore, the shares of Ambuja Cements Ltd were trading at Rs 676.00 per share, increasing around 2.21 percent as compared to the previous closing price of Rs 664.55 apiece.
Matter explanation:-
Nomura, one of the well-known brokerages globally, gave a ‘Buy’ call on the cement stock with a target price of Rs 780 apiece, indicating a potential upside of 15 percent from Thursday’s price of Rs 676.00 per share.
Brokerage Findings:-
As per Nomura expects that Ambuja Cements should have an overall capacity of 106 MT by the financial year 2026, including the recent acquisition of Penna Cement which is valued at Rs 10,422 crore which will make Ambuja the third largest player in South India, only fall behind UltraTech and Ramco Cements.
Furthermore, Penna, along with another Adani purchase, Sanghi Industries, provides the business with a brownfield alternative because of the limestone reserves they control.
Nomura also forecasts Ambuja’s volume growth to be higher than the industry average for the fiscal year 2024-2026. It anticipates Ambuja’s volumes to expand at a compound annual Growth Rate (CAGR) of 13% (excluding Penna), compared to UltraTech’s 11% expectation and a 5% industry average.
Ambuja expects to lower operational costs by Rs 300 per tonne by the end of FY26. It intends to do this by lowering heat use and increasing its use of renewable energy.
Financial performance:-
Looking into the company’s financial performance, revenue increased by 12 percent from Rs 7,966 crore in Q4FY23 to Rs 8,894 crore in Q4FY24. During the same period, net profit magnified significantly by 100 percent, from Rs 763 crore to Rs 1,526 crore.
Company profile:-
Ambuja Cements Limited primarily manufactures and sells cement and associated materials. The company offers several products, including Ambuja Cement, Ambuja Kawach, Ambuja Plus, Ambuja Cool Walls, Ambuja Compocem, Ambuja Buildcem, Ambuja Powercem, Ambuja Railcem, and Alccofine.
Written by:- Abhishek Singh
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