The global brokerage firm Jefferies has maintained a ‘Buy’ rating on Ambuja Cements with a price target of Rs 735, implying a 53% upside from the current levels. The call comes after Jefferies analysts visited the company’s Sanghipuram plant in Gujarat, where management signalled a notable change in strategy, pulling back from breakneck capacity expansion to focus on making existing plants actually work profitably.
Over the long term, the stock has shown strong growth, gaining 59.08% in the past five years. However, recent performance has been weaker. In the last six months, the stock has declined by 18.75%, and year-to-date it is down 17.71%. The short-term trend also indicates a fall, with the price dropping 14.48% in the past month. Over the past year, the stock has decreased by 5.93%.
Here are 5 reasons why Jefferies is betting big on Ambuja Cement
1. Ambuja is done chasing capacity numbers for now
Since the Adani Group acquired Ambuja Cements in September 2022, the company has gone from 68 million tonnes per annum (MTPA) of installed capacity to roughly 110 MTPA in under four years. That is a staggering pace by any measure in the Indian cement industry.
But Jefferies says management is now stepping off the accelerator. The brokerage notes that about 10 MTPA of fresh capacity is still set to be commissioned over the next three to four months, but after that, the focus will shift to stabilising recently built plants and pushing utilisation rates to 80–85%. The earlier stated target of 155 MTPA by financial year 2028 now appears to be more of a soft ambition than a hard deadline.
As Jefferies said, “The commentary suggests a pivot from an expansion-at-scale mindset to a phase of consolidation and execution.”
2. The Sanghi plant story is actually turning around
The Sanghipuram plant originally part of Sanghi Industries before Ambuja acquired it was in poor shape when Adani took over. Power supply was unstable, the plant ran on a cash-and-carry model with suppliers, maintenance had been neglected due to financial stress, and utilisation was low.
Jefferies reports that the turnaround is now visible. Captive power plant (CPP) operations and coal supply have stabilised, marine infrastructure has been upgraded, and clinker and cement capacity utilisation has climbed to 70–75% in recent quarters.
The cost improvement numbers are striking. Clinker manufacturing cost at the time of acquisition stood at Rs 2,400–2,500 per tonne. It has since dropped to below Rs 2,000 per tonne. Management told Jefferies the long-term target is Rs 1,500 per tonne, to be achieved through higher renewable energy usage, a railway line that is a few years away, and better access to fly ash from Adani Power plants nearby.
The plant itself is one of India’s largest single-location cement and clinker facilities spanning 2,700 hectares with a 6.6 MTPA clinkerisation unit and a 6.1 MTPA cement grinding unit. It sits on roughly 100 crore tonnes of high-grade marine limestone reserves across a 1,540-hectare captive mining lease.
3. Petcoke prices are the immediate threat to margins
Jefferies is not writing a purely rosy note. The brokerage flags a clear near-term risk: fuel costs are going up, and cement price hikes may not be enough to compensate.
Geopolitical tensions in the Middle East are pushing crude oil prices higher, which feeds directly into petcoke the primary fuel used in cement kilns across India. Jefferies notes that petcoke prices have already risen 20% and that Ambuja needs to push through cement price increases of at least 2% or more starting April to protect its margins.
If those price hikes do not come through, or if competitors resist them to hold market share, Jefferies warns its earnings estimates for Ambuja could face downward pressure.
4. The numbers Jefferies is working with
Jefferies projects Ambuja’s consolidated revenue to grow from Rs 34,289 crore in the financial year 2025 to Rs 53,384 crore in the financial year 2028. Earnings before interest, taxes, depreciation and amortisation (EBITDA) per tonne the cement industry’s preferred measure of profitability, is expected to recover from Rs 788 per tonne in financial year 2025 to Rs 1,001 per tonne in financial year 2026 and eventually Rs 1,290 per tonne in financial year 2028.
Volume growth is pegged at a 14% compound annual growth rate between financial years 2025 and 2028, with total dispatches reaching 93.8 million tonnes by financial year 2028 against 63.5 million tonnes in financial year 2025.
Adjusted profit after tax is estimated at Rs 2,572 crore in the financial year 2026, rising sharply to Rs 5,490 crore in the financial year 2028.
5. What could go wrong and what could go very right
Jefferies lays out three scenarios for Ambuja over a 12-month horizon.
In its base case, the brokerage arrives at a price target of Rs 735 a 53% return from current levels built on a 14% volume compound annual growth rate and EBITDA of Rs 1,290 per tonne by financial year 2028, valued at 17 times.
In the bull case, the target jumps to Rs 850, implying a 77% return, driven by a 25% volume compound annual growth rate and EBITDA per tonne of Rs 1,400. This scenario assumes a sharp demand recovery across rural housing, urban real estate, and government infrastructure.
In the bear case, the target falls to Rs 400, a 17% loss from current levels. This outcome would play out if demand slows as pent-up demand dries up, and aggressive industry-wide capacity additions start hurting pricing power, leaving EBITDA growing at just 8% annually.
The upside-to-downside ratio on the base case works out to roughly 4.62 to 1 a risk-reward profile Jefferies clearly finds favourable enough to maintain its ‘Buy’ stance.
Conclusion
Jefferies is telling clients that Ambuja Cements, under Adani ownership, is entering a more mature phase after a chaotic few years of acquisition-driven growth. The Sanghi plant is cleaning up its act, costs are coming down, and management is finally talking about sweating existing assets rather than just adding new ones. The near-term wildcard remains fuel costs and whether the industry can hold together on April price hikes.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.