$AMBUJACEM

Ambuja Cements delivered a better-than-expected operating performance in the June quarter, with disciplined cost management helping the company post an EBITDA beat despite lower cement volumes. However, brokerage Nomura lowered its target price on the stock, citing execution risks related to capacity ramp-up and market share, while reiterating its 'Buy' rating. The brokerage cut its target price by 7% to Rs 500. Its volume estimates for FY27, FY28 and FY29 by 9%, 5% and 7%, respectively. The brokerage believes the company's strategy of prioritising higher-margin trade sales over lower-priced non-trade volumes could weigh on its overall market share. It also flagged uncertainties around the ramp-up of acquired assets and the pace of capacity utilisation improvement as key execution risks. While Ambuja's management reiterated its target of achieving cost savings of Rs 200–250 per tonne, Nomura remains more conservative, modelling cost reductions of less than Rs 50–100 per tonne over FY27 and FY28, reflecting its cautious outlook on the pace of operational efficiencies. For the June quarter, Ambuja reported EBITDA of Rs 15.9 billion, exceeding Nomura's estimate by 19% and the Bloomberg consensus by 4%, primarily driven by better-than-expected cost management. Cement volumes stood at 17.1 million tonnes, down 7% year-on-year and 2% below Nomura's forecast, largely due to plant shutdowns and a decline in non-trade sales.