Motilal Oswal Financial Services has reiterated its BUY recommendation on Ambuja Cements, setting a target price of Rs 630 per share—a projected upside of 16% from the current market price of Rs 545. The report underscores Ambuja’s aggressive capacity expansion through acquisitions, ongoing efficiency drives, and ambitious sustainability goals, even as organic growth faces delays. Investors are advised to monitor the company’s progress on integration, cost optimization, and execution of green initiatives, as these will be pivotal in driving profitability and value creation over the next two years.

Summary: Ambuja Cements—Capacity, Cost, and Carbon at the Forefront

Ambuja Cements, under the stewardship of Adani Group, is undergoing a transformative phase marked by rapid capacity expansion, a strong push for operational efficiencies, and bold sustainability targets. Motilal Oswal’s latest research maintains a BUY call, citing the company’s robust acquisition-led growth, ongoing cost-reduction strategies, and a firm commitment to green energy. While organic expansion projects are lagging, the integration of recent acquisitions and realization of cost synergies are expected to drive a sharp rebound in profitability. The stock is attractively valued at 21x/16x FY26/FY27E EV/EBITDA, with a target price of Rs 630, presenting a compelling opportunity for investors seeking exposure to India’s infrastructure and housing boom.

Strong Acquisition-Led Growth, Organic Expansion Lags

Ambuja Cements has catapulted its consolidated capacity from 76.9mtpa in March 2024 to 100.3mtpa by June 2025, primarily via strategic acquisitions including Orient Cement, Sanghi Industries, and Penna Cement.

The company’s inorganic growth strategy has outpaced its organic expansion, with 12 ongoing projects facing 6–12 month delays.

The board has greenlit an additional 21mtpa of grinding capacity, targeting an ambitious 140mtpa by FY28.

Consolidated sales volumes surged 10% YoY to 65.2mt in FY25, though standalone production grew a modest 3% YoY.

Capacity utilization dipped to 78% in FY25 from 82% in FY24, reflecting integration challenges and project delays.

Relentless Cost Optimization Amidst Execution Challenges

Ambuja is executing a multi-pronged cost-reduction program, leveraging group synergies, long-term raw material agreements, and a decisive shift toward green energy.

Nearly 40% of fly-ash requirements are now secured via long-term contracts, while limestone reserves have been boosted to 9 billion tons.

Green energy capacity (WHRS, solar, wind) rose sharply in FY25, with the company targeting a 60% green power share by FY28—expected to trim power costs by Rs 90/ton.

Logistics optimization, including a growing marine fleet and depot rationalization, has already reduced freight costs by 6% and aims for a further 15% cut by FY30.

Operating expenses per ton declined marginally by 1% YoY to Rs 4,460 in FY25, with a target of Rs 3,650 by FY28.

Synergies and Scale: Related-Party Transactions Surge

Leveraging the Adani Group ecosystem, Ambuja has sharply increased related-party transactions to unlock economies of scale, enhance supply chain integration, and optimize resource utilization.

Purchases from related parties soared to Rs 49.2 billion in FY25 from Rs 14.7 billion in FY24, with outstanding receivables also rising.

Master Supply Agreements (MSAs) with group entities such as ACC, Penna, and Sanghi are central to this strategy, driving both revenue and cost efficiencies.

Advances for long-term raw material supply and asset transactions with group companies further cement these synergies.

Financials: Growth, Margins, and Valuation

Despite margin compression in FY25, Ambuja is poised for a sharp rebound as integration of acquisitions and cost initiatives take hold.

Revenue, EBITDA, and PAT are projected to grow at a CAGR of ~17%, 35%, and 33% respectively over FY25–27.

EBITDA per ton is forecast to rise from Rs 768 in FY25 to Rs 906 in FY26 and Rs 1,096 in FY27.

The stock trades at 21x/16x FY26/FY27E EV/EBITDA, with a price target of Rs 630 based on 18x FY27E EV/EBITDA.

Free cash flow is expected to turn positive in FY27, following a period of heavy capex and integration costs.

Key Financial Metrics (FY25–FY27)

Sustainability: Decarbonization and Global Leadership

Ambuja Cements is charting a path to Net Zero emissions by 2050, with interim targets for significant reductions in both Scope 1 and Scope 2 emissions by 2030.

The company aims to cut Scope 1 emissions to 440kg/ton of cementitious material (from 537kg in FY25) and Scope 2 emissions to 10kg/ton by 2030.

It is the first cement company globally to join the Alliance for Industry Decarbonization and is active in the World Economic Forum’s Net Zero Industrial Cluster Initiative.

Investments in WHRS, solar, and wind are central to this roadmap, alongside aggressive targets for energy efficiency and alternative fuel usage.

Risks and Execution Watchpoints

While the long-term story is compelling, investors should be vigilant regarding execution risks, integration of acquired assets, and the timely realization of cost savings.

Organic expansion delays could weigh on near-term volume growth.

Integration of recent acquisitions and realization of group synergies are critical to margin improvement.

External risks include macroeconomic headwinds, regulatory changes, and volatility in input costs.

Stock Levels and Investor Targets

Motilal Oswal maintains a BUY rating on Ambuja Cements with a target price of Rs 630, representing a 16% upside from the current price of Rs 545.

Key support levels: Rs 500–520

Resistance: Rs 600–630 (target)

Investors are advised to accumulate on dips, with a medium-term horizon to benefit from the unfolding capacity and efficiency story.

In short, Ambuja Cements stands at the intersection of scale, sustainability, and synergy. For investors, the stock offers a unique blend of growth potential, operational turnaround, and ESG leadership—making it a prime candidate for portfolio inclusion as India’s infrastructure cycle accelerates.