Improving margins likely to help Ambuja Cements emerge as an outlier

Ambuja Cement could increase its EBITDA margin from 13.2% in FY23 to around 19.5% in FY24, with continued gains likely in FY25 and FY26 due to effective cost control and increased scale

The cement industry remains a bit of a puzzle for investors. While demand appears to grow steadily on the back of government infra projects, every company within the sector is actively investing in capital expenditures (capex). This could lead to a persistent supply overhang, potentially triggering a price war.

While demand has been good through the ongoing January-March quarter (Q4) of FY24 so far, with an estimated 10 per cent volume expansion over a weak Q3 of FY24, prices fell through Q4. However, fuel and raw materials costs were low, compensating to some extent.

Among the expansion plans, Ambuja Cements,