Ambuja Cements Share Price

Ambuja Cements Limited Fundamental Analysis

This article seeks to analyze Ambuja Cements Limited, its business model, and industry fundamentals in order to establish whether or not it would be a great investment for you.

Ambuja Cements Limited

Ambuja Cements Limited was formerly known as Gujarat Ambuja Cement Limited (GACL). It is a major Indian cement producing company. Founded in 1983, it has a strong presence in both domestic and export markets.

The company is renowned for its high-quality cement products and commitment to sustainable construction practices. It produces Portland pozzolana cement and ordinary Portland cement. Ambuja Cements has a cement capacity of 31 million tonnes with six integrated cement manufacturing plants and eight cement grinding units across the country.

The company is a member of the Adani Group, and it has established its leadership in water governance by being 11 times water positive. Ambuja Cements is also plastic negative, by burning plastic waste in its kilns, equivalent to 8 times of total plastic used.

The company’s Sustainable Development Ambition 2030 provides strategic direction to its long-term sustainability vision. All the plants of Ambuja Cement are certified ISO 14001.

Is the Cement Sector a Goldmine Investment?

The cement sector in India is showing promising signs for investment. As of 2024, the Indian cement industry is consolidating, with the market shares of top companies growing. Large cement corporations are increasing capacity through organic growth and acquisitions, driven by strong demand.

The market shares of the top five cement companies increased to 54% as of December 2023 and are expected to further grow to 55% by March 2025. ICRA’s outlook on the cement sector is stable, with revenues expected to increase by 9-10% and operating margins likely to improve by 80-100 basis points to around 16.8-17.3% in 2024-25.

Moreover, the India Cement Market size is estimated at 413.95 million Tons in 2024 and is expected to reach 602.68 million Tons by 2030, growing at a CAGR of 6.46% during the forecast period (2024-2030). This growth is supported by infrastructure developments and housing projects across India.

Considering these factors, Ambuja Cements Limited appears to be a good choice for investment. The company’s strong presence in the domestic and export markets, commitment to sustainable construction practices, and leadership in water governance make it a standout in the sector.

Who are Ambuja Cements Limited competitors in the Paint Sector?

Ambuja Cements Limited operates in a competitive environment in the cement sector. Some of its primary competitors include:

• ACC Ltd.
• UltraTech Cement
• India Cements
• Shree Cement
• Dalmia Bharat Ltd.

History of Ambuja Cements Limited

Here is a brief history of Ambuja Cements Limited:

• Incorporation: Ambuja Cements Limited was established in 1983 by Narotam Sekhsaria and Suresh Neotia. It started as a single plant with a capacity of 700,000 tonnes per annum in 1986. The company later became a part of the Adani Group in 2022.
• Product Range: Ambuja Cement offers a range of products including Ambuja Cement, Ambuja Plus, Ambuja Kawach, and Ambuja Compocem. They also developed an innovative way of using fly ash to produce high-strength Portland Pozzolana Cement.
• Infrastructure: Ambuja Cement operates with a cement capacity of 31 million tonnes, spread across six integrated cement manufacturing plants and eight cement grinding units nationwide.
• Certifications: In 2010, the company received an ISO 9001:2008 certification for quality, an ISO 14001:2004 certification for environmental systems, and OHSAS 18001:2007 by BSI (UK). Their range of blended cement products is certified and enlisted in GRIHA’s green product catalog.
• Awards and Recognition: Ambuja Cements has been recognized for its sustainability efforts and has received numerous awards including the National Award for Energy Excellence 2022, the ‘ESG India Leadership Awards 2022’ for Water Efficiency, GHG Emissions and Overall Leadership in Environment, and the Economic Times ICONIC Brands of India 2022 award.

Company Profile of Ambuja Cements Limited

Pros:

• Growth in Sales: Asian Paints reported an increase in consolidated sales for the full year 2024, reaching ₹35,382 crores ($4.23 billion).
• Volume Growth: The company’s Decorative Business in India registered a 10% volume growth.
• Profit Growth: Profits for the year have grown in strong double digits, supported by subdued material prices coupled with sourcing and formulation efficiencies.
• International Business: There has been steady growth in the Middle Eastern and African markets.

Cons:

• Profit Before Tax Decrease: Profit before depreciation, interest, tax, and other income (PBDIT) for the Group decreased by 9.3% to ₹1,691.4 crores ($202 million).
• High PE Ratio: The company has a very high Price-to-Earnings (PE) ratio, which might indicate that the stock is overvalued.
• Moderate Decline in Revenue: There’s a moderate decline of -4.12% compared to the previous quarter, which could be a concern for short-term investors.

The Finances

Here’s a summary of Ambuja Cements Limited’s financial information as of June 2024:

Shareholding pattern of Ambuja Cements Limited

Here’s a concise summary of Ambuja Cements Limited’s shareholding pattern as of June 2024 :

• Promoters: Hold 70.3%
• Foreign Institutional Investors (FII): 9.9%
• Domestic Institutional Investors (DII): 12.9%
• Public: 6.9%

Peer Multiple Comparison

Let us compare Ambuja Cements Ltd. with its peers that have full data available. See the table below: