Ambuja Cements shares: Nuvama sees 17% upside potential as Adani Group ramps up capacity

Nuvama Institutional Equities has reiterated its positive stance on Ambuja Cements, citing robust expansion plans, cost-efficiency initiatives and an optimistic demand outlook.

As per Nuvama, the Adani Group's cement business has reached a consolidated capacity of around 103 million tonnes (MnT) -- including Orient Cements -- and is set to expand to 118MnT by FY26E and further to 140MnT by FY28E. Clinker capacity is projected to touch 107MnT by the end of FY28.

Ambuja Cements is also pursuing significant cost savings, aiming for a reduction of Rs 500–550 per tonne by FY28E through operational efficiencies, scale benefits and logistics optimisation. Notably, the company expects a 25 per cent year-on-year (YoY) volume growth in FY26E, aided by acquisitions and organic capacity additions.

The management indicated that cement prices have likely bottomed out, and the company is optimistic about a recovery in pricing trends. Currently holding a 14.5 per cent market share, Ambuja is targeting an increase to 17–18 per cent by FY28E and crossing 20 per cent by FY30E.

Sustainability remains a key strategic focus. Ambuja has already commissioned 375MW of green power capacity, with a roadmap to scale it up to 1GW by June 2026. By FY30E, it aims to meet 60 per cent of its power needs through green sources, compared to the present 21 per cent. The capex for greenfield capacity addition is pegged at $75–80 per tonne.

"We continue to like Ambuja Cements for its healthy capex pipeline, volume growth outlook, and cost-efficiency measures," said Nuvama. The brokerage has retained its 'BUY' rating with a target price of Rs 694, based on an EV/EBITDA multiple of 20x FY27E.

This strategic ramp-up, coupled with the group's green energy transition and operational focus, is expected to further solidify Adani's position in India's cement sector.

Meanwhile, shares of Ambuja were trading 2.53 per cent higher at Rs 594.65 on Wednesday, indicating a potential upside of 16.71 per cent based on Nuvama's revised target price.