Bernstein upgrades this cement stock to 'Outperform' in a contrarian call; Check price target

Bernstein upgraded Ambuja Cements Ltd. to "Outperform" from its earlier rating of "Market Perform" on Thursday, July 2, saying the valuation gap between India's two largest cement producers has become unsustainable.

Despite the upgrade, Bernstein cut its price target on Ambuja Cements to ₹486 from ₹542 per share, which implies an upside potential of 16% from current levels.

The brokerage said Ambuja is trading at a sharp discount to rival UltraTech Cement, even though it has emerged as the country's second-largest cement producer by capacity.

According to Bernstein, UltraTech trades at an enterprise value of around ₹3.6 lakh crore with 206 million tonnes per annum (MTPA) of cement capacity, while Shree Cement commands an enterprise value of about ₹90,000 crore, with 69 MTPA. In comparison, Ambuja trades at an enterprise value of around ₹1.2 lakh crore despite having 109 MTPA of capacity.

The brokerage said Ambuja is currently valued at roughly the cost of building a new greenfield cement plant, which it believes does not reflect the company's scale or earnings potential.

Bernstein expects Ambuja's ongoing capacity expansion and operational improvements to help narrow the EBITDA per tonne gap with both UltraTech and Shree Cement going forward

The brokerage believes stronger execution over the coming years should drive a re-rating as the company closes the profitability gap with larger peers.

46 analysts have coverage on Ambuja Cements, of which 33 have a "buy" rating on the stock, 10 say "hold", while three others have a "sell" rating.

Shares of Ambuja Cements are currently trading 1.7% higher on Thursday at ₹426.5. The stock is down 32% from its 52-week high of ₹624. The stock is down 24% so far in 2027.