Ambuja Cements Q1 EBITDA drops 19%; brokerages see 30% upside
Adani Group's Ambuja Cements reported a 19% drop in quarterly EBITDA due to geopolitical cost pressures, but analysts see a buying opportunity as the stock sits 24% lower this year.
Ambuja Cements has reported a 19% year-on-year decline in first-quarter EBITDA to Rs 1,589 crore, hit by rising fuel prices and freight disruptions linked to the West Asia crisis. Revenue fell 7.5% to Rs 9,474 crore as sales volumes dropped 7%. The Adani Group company's EBITDA margin contracted to 16.7% from 19.1%.
The results highlight the material impact of global supply chain strains on Indian industrial margins. Management warned that the worst of the fuel cost inflation has yet to be reflected in earnings. Because of a 60-to-90-day fuel inventory cycle, peak costs will likely hit the seasonally weak second quarter, threatening near-term industry profitability.
Despite the weak headline numbers and a stock price that has fallen 24% so far in 2026, major brokerages remain firmly bullish. Nuvama, Motilal Oswal and JM Financial all reiterated 'Buy' ratings, pointing to better-than-expected cost controls and robust capacity expansion plans.
Nuvama noted that while volumes fell, EBITDA actually rose 26% sequentially. "We believe this is the right approach in the current challenging environment," the brokerage said, raising its price target to Rs 555 to imply over 30% upside from the previous close of Rs 426. Motilal Oswal kept a Rs 500 target, citing the integration of acquired assets and cost curve improvements as key catalysts. "We believe improvement in the cost curve, higher capacity utilisation and volume growth, integration of acquired assets, and timely completion of ongoing expansions will remain key variables to watch," it said.
JM Financial, which set a target of Rs 515 for roughly 21% upside, highlighted the company's long-term production roadmap. Ambuja is on track to lift installed capacity from 109 million tonnes to 119 million tonnes by the end of fiscal year 2027. It then plans to add 8 to 10 million tonnes of organic capacity annually.
The divergence between the company's operational struggles and analyst sentiment underscores how heavily the market is discounting the stock. With shares down more than 30% over the past year, investors are betting that the current geopolitical cost shocks are temporary, while the underlying expansion trajectory remains intact. JM Financial adjusted its models accordingly, raising its FY27 EBITDA estimate by 4% while trimming its FY28 view by 4%.
