ACC Limited — Q4 FY26 earnings call

Call held 4 May 2026

Management summary

ACC reported strong FY26 performance with record volumes and significant EBITDA growth, driven by capacity expansion and focus on premium products. However, the company faced cost pressures, lower utilization of acquired assets, and project delays, leading to a recalibration of growth timelines and a renewed focus on internal execution and cost optimization. Management is confident in achieving substantial cost reductions over the next two years while maintaining a disciplined capital allocation approach.

Highlights

  • Annual sales volume reached 73.7 million tonnes, a 16% Y-on-Y increase, growing well ahead of the industry.

  • EBITDA grew 31% to INR6,539 crores, with EBITDA per metric ton improving 12% to INR887.

  • PAT increased by 17% to INR2,647 crores.

  • Company maintains a debt-free status with the highest credit rating.

  • Green power share increased to almost 32% in Q4, up from 26% previously.

Concerns

  • Full year FY26 cost of INR4,400/tonne was 10% higher than the initial target of INR4,000/tonne.

  • Newly acquired assets (Sanghi at 57%, Penna at 46%) witnessed lower utilization levels, and turnaround initiatives are taking longer than expected.

  • Q4 March quarter volumes were muted, and demand in April/May is subdued/soft, leading to pricing pressure and inability to pass on full cost increases.

  • Capex projects have experienced delays due to contractor issues, lack of initial team, and incomplete engineering.

Key financials

  1. Annual Sales Volume 73.7 million tonnes +16%YoY
  2. EBITDA ₹6,539 Cr +31%YoY
  3. EBITDA per metric ton ₹887 +12%YoY
  4. PAT ₹2,647 Cr +17%YoY
  5. Full Year FY26 Cost per tonne ₹4,400
  6. Total Capacity 109 million tonnes

What they filed

Q1 FY27: revenue down 4.6%, net profit down 60.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,634 5,972 6,115 6,087 6,005 +30%6,483 +9%7,146 +17%5,808 −5%
EBITDA436 1,116 830 778 846 +94%700 −37%626 −25%457 −41%
Net profit200 1,092 751 375 1,119 +460%404 −63%238 −68%147 −61%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹7,500 Cr
    • Capacity, WHRS, fly ash transportation system ₹4,000 Cr
    • Debottlenecking and maintenance capex
    Vinod Bahety: "So capex for the year, we are keeping it a little moderate and ballpark, when you say this year so you're saying for FY '26. FY '26 is closer to about INR7,500-odd crores. And I will just answer because there would be another question. So for FY '27, we are keeping an estimate of almost INR6,000 crores to INR6,500 crores." Karan Adani: "So roughly INR4 billion is what is already the capex, which is already under execution, and it is implementation of that, which includes capacity, which includes WHRS, which includes your fly ash transportation system that we need. And the balance is, I would say, debottlenecking plus maintenance capex."
  • Debt Gross ₹0 Cr · Net ₹0 Cr · 0.0× EBITDA
    Vinod Bahety: "The company continues to remain debt-free and with highest credit rating."
  • M&A Sanghi Industries and Penna Cement Merger · Integrated

    Portfolio integration, business synergies

    Successful amalgamation completed, leading to finalized purchase price allocation and marginal changes in balance sheet.

    Vinod Bahety: "Successful amalgamation of Sanghi Industries and Penna Cement with Ambuja Cements is now completed"
  • M&A ACC and Orient Cement Merger · Pending regulatory

    Portfolio integration, business synergies

    Integration under process, finalized purchase price allocation for Orient led to marginal changes in balance sheet.

    Vinod Bahety: "while ACC and Orient Cement is under process."

Guidance & targets

Volume

  • Consolidated Sales Volume Volume · FY27 · High confidence 80 million tonnes
    On our overall consol volumes, we are expecting it to grow in FY '28 -- '27 by almost, say, 8% to around 80 million-odd tonnes.

    — Vinod Bahety

Capacity

  • Total Capacity Capacity · end of FY27 · High confidence 119 million tonnes
    We are expecting to hit capacity of almost 119 million tonnes by end of FY '27.

    — Vinod Bahety

Cost

  • Cost per tonne reduction Cost · FY27 · High confidence INR250/tonne
    But let me just add that cost, we are looking at roughly INR250 a tonne reduction this year and then another reduction of INR250 next year as well. That is the minimum reduction that we are looking at.

    — Karan Adani

  • Cost per tonne reduction Cost · FY28 · High confidence INR250/tonne

    — Karan Adani

  • Cost per tonne target Cost · FY27 · High confidence INR4,250/tonne

    Previously INR4,400/tonne (FY26) → INR4,250/tonne

    So Rajesh, thank you. What we would put it is INR4,500 is the peak and this INR250 reduction is from here. So essentially, then it would mean INR4,250 as a target for '27.

    — Vinod Bahety

  • Cost savings from raw material and green energy Cost · null · Medium confidence INR150-200
    Therefore, I strongly believe INR150 to INR200 savings will come from these components.

    — Vinod Bahety

Capex

  • Capex Capex · FY27 · High confidence INR6,000-6,500 crores
    So for FY '27, we are keeping an estimate of almost INR6,000 crores to INR6,500 crores.

    — Vinod Bahety

Utilization

  • Acquired Assets Utilization (Sanghi & Penna) Utilization · null · Medium confidence increase by 5-10%
    Together, they have 19 million tonnes of capacity, and the target is to increase the utilization by at least 5% to 10% for these assets.

    — Vinod Bahety

Premium Products

  • Share of Trade Sales from Premium Cement Premium Products · null · High confidence 36%
    So Manish, right now, for example, I would say that 36% is a good number for us to sustain. And therefore, that is what, for example, can be considered in terms of the share of premium cement as a percentage of trade sales.

    — Vinod Bahety

Project IRR

  • Project Internal Rate of Return Project IRR · null · High confidence 18%
    It's capex -- I mean, the project IRR has to be 18%.

    — Karan Adani

What to watch in Q1 FY27

Acquired Asset Utilization Improvement

Next few months
Current Sanghi 57%, Penna 46%
Target Increase by 5-10%

Why it matters

Essential for improving overall profitability and achieving desired cost levels from acquired assets.

Vinod Bahety: "We will continue to improve the reliability at Penna and Sanghi and the overall asset utilization. Together, they have 19 million tonnes of capacity, and the target is to increase the utilization by at least 5% to 10% for these assets."

Risks & concerns

  • Lower utilization of acquired assets

    high

    Sanghi (57%) and Penna (46%) are operating below desired levels, impacting overall costs and profitability. Management acknowledges this as a key focus area for improvement.

    Management acknowledged

  • Cost escalation and inability to pass on prices

    high

    Global geopolitical factors, higher freight, packing, and fuel costs led to FY26 costs being 10% above target. Softer demand makes it difficult to pass on these increases to customers, leading to margin pressure.

    Management acknowledged

  • Capex project delays

    medium

    Delays in commissioning new capacities (Maratha, Chhattisgarh mentioned) due to issues with contractors, lack of initial teams, and incomplete engineering, impacting growth timelines and efficiency benefits.

    Management acknowledged

  • Softer demand outlook

    medium

    Industry growth expected at 5-5.5% due to inflation and weak monsoon, leading to a 'softer' demand environment and pricing pressure.

    Management acknowledged

Q&A highlights

5 direct
Volume growth and long-term capex strategy Direct
Karan Adani: "Inorganically, we keep evaluating, but our focus right now is on organic development and greenfield expansion. That is our number 1 priority.

Clarifies a strategic shift from aggressive capacity targets to a more disciplined, organic growth approach, emphasizing asset utilization and cost reduction over rapid expansion.

Asked by Navin Sahadeo (ICICI Securities)

Higher cost structure compared to peers Partial
Vinod Bahety: "So I would say that the acquired assets still are not basically coming in the range to our desired levels and for which I had mentioned that the first priority is to stabilize the overall operations, achieve a good level of performance improvement.

Highlights internal operational challenges, particularly with acquired assets, as a key driver of higher costs, distinguishing Ambuja's situation from broader industry trends.

Asked by Jashandeep Singh Chadha (Nomura)

Future EBITDA/tonne guidance and cost reduction targets Direct
Karan Adani: "But let me just add that cost, we are looking at roughly INR250 a tonne reduction this year and then another reduction of INR250 next year as well. That is the minimum reduction that we are looking at.

Provides specific, quantifiable cost reduction targets for the next two fiscal years, which is crucial for margin improvement, even if a full EBITDA/tonne target was not given.

Asked by Pinakin (HSBC)

Strategic reset and operational priorities Direct
Karan Adani: "Yes. So I think why the reset, I mean, it's quite evident our performance has not been great. We've not been able to we've not been able to deliver what we have promised to our shareholders. And so that is number one. I think the key KPIs that we are putting for ourselves is we need to reduce. We need to I would say 5 things that we need to focus on.

Provides a candid admission of past underperformance and outlines clear, actionable focus areas for the company's turnaround strategy.

Asked by Ritesh Shah (Investec)

Reasons for capex project delays Direct
Karan Adani: "One of the main reasons why we have not been able to deliver as per what our standards are is 2, 3 things. I think one is we did not choose the right contractor for execution. Number two is, we started these projects when we acquired Ambuja and ACC. And at that time, there was no team. So it took us time to build up that team as well. And we are confident that at least now we will be able to complete these projects in the time line that were given. And number three is a lot of these projects were started without full engineering being done in place.

Reveals critical internal execution and planning deficiencies that led to project delays, indicating a need for fundamental operational improvements.

Asked by Raghav Maheshwari (Equirus Securities)

Strategic recalibration of capacity locations Direct
Karan Adani: "So one of the things that we are working towards is shutting down the grinding units in a lot of these places and moving them closer to the market. So that is the recalibration we are looking at.

Explains a key strategic shift aimed at improving cost efficiency and market penetration by optimizing the geographical distribution of grinding units.

Asked by Satyadeep Jain (AMBIT Capital)

2 min read 6 chapters

Detailed narrative

Strong FY26 Performance Despite Headwinds

ACC delivered a resilient performance in FY26, achieving its highest ever annual sales volume of 73.7 million tonnes, a 16% Y-on-Y increase, growing well ahead of the industry. EBITDA grew 31% to INR6,539 crores, with EBITDA per metric ton at INR887, up 12%. PAT also increased by 17% to INR2,647 crores, and the company maintained its debt-free status with the highest credit rating.

Capacity Expansion and Integration Progress

The company's cement capacity expanded to 109 million tonnes, with 10.7 million tonnes of new grinding capacity and 7 million tonnes of clinker capacity commissioned during the year. The amalgamation of Sanghi Industries and Penna Cement with Ambuja Cements is complete, while the integration of ACC and Orient Cement is in process, leading to balance sheet adjustments for finalized purchase price allocation.

Cost Pressures and Optimization Efforts

Despite cost optimization efforts, the full year FY26 cost per tonne was INR4,400, 10% higher than the initial target of INR4,000. This was attributed to higher freight, packing costs, fuel consumption, and increased branding/sales promotion for trade sales. Management expects INR150-200 in savings from raw materials and green energy, targeting an FY27 cost of INR4,250/tonne.

Strategic Recalibration and Disciplined Capital Allocation

Management acknowledged past underperformance and announced a 'reset' in strategy, shifting from aggressive capacity targets (previously 140-155 MT) to a more disciplined approach. The focus is now on optimizing current capacities, improving utilization of acquired assets (Sanghi 57%, Penna 46%), and streamlining operations. FY26 capex was INR7,500 crores, with FY27 estimated at INR6,000-6,500 crores, prioritizing projects with an 18% IRR.

Operational Challenges and Project Delays

Capex projects have faced delays due to issues such as selecting unsuitable contractors, lack of an initial dedicated team post-acquisition, and commencing projects without complete engineering. These delays have impacted the timely commissioning of new capacities and the realization of associated efficiency benefits, particularly in acquired assets where breakdowns led to higher repair and maintenance costs.

Market Dynamics and Pricing Environment

The company observed muted volumes in Q4 March and a subdued demand environment in April/May, with industry growth projected at 5-5.5% for FY27 due to inflation and weak monsoon. This softer demand has limited the company's ability to fully pass on increased costs, leading to modest price improvements of only INR10-20 in select geographies.

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