New Delhi [India], August 25 : Global financial services firm Cantor Fitzgerald has given an "overweight" rating to Adani Group cement company Ambuja Cements, expecting a return of about 30% on investments over the next 12 months.
It pegged a target price of Rs 745, implying nearly 30 per cent upside from current levels over the next 12 months.
Currently, Ambuja Cements' shares are trading at Rs 582.
Ambuja Cements ranks as the ninth-largest cement company in the world.
Cantor, citing company guidance, said the company has expanded by 50 per cent in less than three years, reaching a current capacity of 104.5 MTPA, which is expected to grow to 118 MTPA by 2025-26 and 140 MTPA by 2027-28. This, according to the Cantor, was possible due to a combination of acquisitions and organic growth efforts.
According to management, the focus in 2025-26 will be on organic growth.
The company's market share has increased from about 8 per cent three years ago to 15.5 per cent now, with goals to reach 18 per cent and 20 per cent by 2027-28 and 2029-30, respectively.
"Management expects India's cement industry to grow at a rate of 1.2 to 1.5 times that of GDP, and ACEM (Ambuja Cements) aims to deliver double this sector's growth rate," said the Cantor report issued on August 24.
Alongside plans to reduce raw material costs by 8-10 per cent, Ambuja Cements remains well-positioned to stay competitive through digital transformation and effective risk management efforts.
Additionally, premium cement remains a key focus, accounting for approximately a quarter of its trade volume in 2024-25, with a price premium of Rs 400 per tonne aimed at enhancing profitability.
India ranks as the second-largest global producer of cement, with an installed capacity of 686 million tonnes (MTPA), significantly behind China (3,000-3,500 MTPA), as per the report.
"In terms of per capita cement consumption, India ranges from 280 to 330 kg, which is roughly one-quarter of China's and about two-thirds of the rest of the world. This growth is driven by solid economic fundamentals, including strong GDP growth and rising household incomes as more people move into the middle-income bracket, and a growing working-age population that will increase demand for cement," it asserted.
The top five cement players are expected to boost capacity by about 12 per cent, roughly 130 million tonnes, through 2029-30, the financial services firm said in the report.
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