ACC

ACC reported a consolidated revenue of INR 9,329 crores for Q3 FY25, driven by a strong focus on micro market management and dealer network expansion. The company achieved an EBITDA of INR 1,712 crores, translating to an 18.4% margin and INR 1,038 per ton. Operational costs were managed effectively at INR 4,618 per ton, benefiting from a 7% decline in energy costs and a 6% reduction in transportation costs, with lead distance decreasing by 4 kilometers to 285 kilometers.

ACC is on track to expand its cement capacity to 140 million tons by FY28. With the advanced stage of the Orient Cement acquisition, total capacity is expected to reach 104 million tons by Q4 FY25. The company has commissioned 8 new ready-mix plants, reaching a milestone of 100 plants. Key projects include a 4-million-ton clinker unit in Bhatapara (78% complete, expected Q4 FY25) and associated grinding units, with further expansions planned to reach 118 million tons by end of FY26.

The company is pursuing a cost reduction target of INR 530 per ton, aiming for an operational cost of INR 3,650 per ton by FY28. Initiatives include increasing waste heat recovery (WHRS) capacity to 218 megawatts by March '25 (currently 197 MW) and commissioning 1,000 megawatts of renewable energy by FY26. These efforts, along with better fuel management and footprint optimization, have already reduced power and fuel costs by 7% to INR 1,262 per ton in Q3 FY25.

ACC is committed to net-zero by 2050, with significant progress in green energy. The 200-megawatt solar power project in Khavda, Gujarat, was commissioned in Q3 FY25. By FY28, WHRS and solar power are expected to meet 60% of power requirements for 140 MT capacity and 83% for clinkerisation, aiming to reduce power costs by INR 100 per ton. The company also increased its use of waste-derived resources to 4.8 million tons in Q3, promoting a circular economy.

The integration of acquired assets like Penna and Sanghi Industries is ongoing. While these acquisitions contributed to a 17% volume growth, they are currently operating at sub-40% utilization, leading to higher costs and impacting sequential profitability. Management expects these assets to reach 70% plus utilization in the next financial year, with specific initiatives like WHRS for Sanghi Line 2 taking about 12 months to come online. The depressed pricing in the South market also affected overall realization.

Management anticipates an improved consumption demand in housing and infrastructure segments, with government spending poised to reverse the tepid 1.5-2% cement demand growth in H1 FY25. Demand is expected to grow by 4-5% in FY25, with H2 performing better than H1. ACC believes it is well-positioned to benefit from these trends and grow faster than the industry, leveraging its accelerated growth, lower costs, and group synergies.