Scaling Smart:

AMBUJACEM

Bets on Efficiency and Expansion to Cement Market Leadership

is doubling down on both volume growth and operational efficiency as it charts an ambitious expansion path. The company now targets cement capacity of nearly 155 million tonnes per annum (mtpa) by FY28—up from 97 mtpa in FY25 and higher than its earlier goal of 140 mtpa. This implies a steep 17% CAGR in capacity over FY25–FY28, significantly outpacing the expected industry demand CAGR of 7–7.5%. 🔹 Capacity Expansion Strategy - Revised target: 155 mtpa by FY28 vs. 140 mtpa earlier. - Incremental 15 mtpa to be added via debottlenecking at existing plants. - Capital efficiency: Expansion cost pegged at $48/tonne—lower than greenfield benchmarks. 🔹 Volume Growth & Market Share - Organic volumes (excluding Penna, Sanghi, and Orient acquisitions) rose 11% YoY in Q2—outpacing industry growth. - Management expects double-digit volume growth in FY26 vs. industry’s 7–8%. - Market share increased 100 bps YoY to 16.6%; target is 20–22% by FY28. 🔹 Profitability & Cost Optimization - Q2FY26 EBITDA/tonne held steady at ₹1,061, while peers saw 20–25% declines. - Target EBITDA/tonne: ₹1,450–₹1,500 by FY28, driven by mix improvement and cost control. - Multi-year cost reduction roadmap: - ₹4,200/tonne → ₹4,000 by FY26 - ₹3,800 by FY27 - ₹3,650 by FY28 - Gains expected from fuel mix optimization, logistics efficiencies, and synergy benefits. 🔹 Sustainability & Green Power Push - Renewable capacity to rise from 673 MW to: - 900 MW by FY26 - 1,122 MW by FY27 - Green power share to increase from 33% to 60% by FY28. 🔹 Valuation & Investment View - Stock up 6% YTD; trades at 15x EV/EBITDA on FY27 estimates. - Timely execution of capacity additions and seamless integration of acquired units will be key to re-rating. - While demand-supply dynamics pose challenges, Ambuja’s cost discipline and strategic positioning offer a credible growth narrative.