Ambuja Cements shares drop over 2% after Q4 results. What Jefferies and Nomura are saying (original) (raw)

Shares of Adani Group-owned Ambuja Cements slipped as much as 2.5% to their day’s low of Rs 439.55 on the BSE on Tuesday, even after reporting a consolidated net profit of Rs 1,830 crore for the March quarter compared to Rs 1,025 crore in the year-ago period, implying a 78% year-on-year jump.

The company's revenue from operations in Q4FY26 stood at Rs 10,892 crore, up 10% from Rs 9,894 crore in the corresponding quarter of the previous financial year. The profit after tax (PAT) surged 664% on a sequential basis compared to Rs 240 crore in the October-December quarter of FY26.

In its filing to the exchanges, Ambuja reported the highest-ever sales volume in a quarter at 19.9 million tonnes, a 10% YoY growth. The revenue was also the highest ever, while the operating Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) stood at Rs 1,464 crore with a margin at 13.4%.

## Should you buy Ambuja shares?

Jefferies has retained its Buy rating on Ambuja Cements share price with a reduced target price of Rs 595, an upside of 33% from current levels. The brokerage said the company is recalibrating its strategy, including a reset of its expansion plans, with capacity addition timelines pushed back by around two years. It has lowered its EBITDA estimates and target price, noting that a clear improvement in costs will be key to restoring investor confidence.

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On pricing, management indicated that although costs have risen by about Rs 25 per bag, the industry has seen only a modest increase of around Rs 10 per bag in April. Any further price hikes are expected to come through gradually.

Nomura has maintained a Buy rating on Ambuja Cements shares with a target price of Rs 540, an upside of over 21% from current levels. The brokerage noted that costs remained elevated in the March quarter, driven by higher spending on branding and advertising, along with increased repairs and maintenance linked to breakdowns in acquired assets. Management is aiming to reduce overall costs by Rs 250 per tonne in FY27, from the Q4FY26 peak of around Rs 4,500 per tonne.

The company expects savings of Rs 150–200 per tonne from raw materials, supported by higher use of fly ash and green energy initiatives. It is also focusing on operational efficiencies and margin improvement.

## Ambuja Cements management commentary

Whole Time Director and CEO Vinod Bahety said FY26 was a year of resilience for the cement sector, which has witnessed consolidation, GST 2.0 reforms on one side, while adverse weather conditions, global geo-political factors, and state elections affected some or the other way.

"We remain focused on stabilising new capacities, strengthening operating efficiency and improving asset utilisation, supported by a debt‑free balance sheet, strong liquidity and the highest credit ratings. While India’s long-term infrastructure growth story remains fundamentally strong, the outlook for FY27 growth remains soft due to current geopolitical challenges and early forecast of below normal monsoon. We expect industry demand at 5% for FY 27,” he added.

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