Ambuja Cements

Ambuja Cements reported a robust Q2 FY26, with revenue growing 21% YoY to ₹9,174 crores. Sales volume increased by 20% YoY to 16.6 million tons, significantly outperforming the industry average of 4%. This strong performance was attributed to concerted branding, marketing, and increased customer preference for premium products, which now constitute 35% of total trade sales. EBITDA surged 58% YoY to ₹1,761 crores, translating to an EBITDA per metric ton of ₹1,060 and an expanded EBITDA margin of 19.2%.

The company achieved a cost reduction of ₹238 per metric ton YoY, primarily driven by lower kiln fuel costs, which stood at ₹1.65 per 1,000-kilo calories (excluding AFR). Management targets further cost reductions, aiming for a total cost of ₹4,000 per metric ton by March '26, ₹3,800 by March '27, and ₹3,650 by March '28. Logistics costs also decreased by 7% YoY to ₹1,224, supported by a 2-kilometer reduction in primary lead distance to 265 kms. The company is also building 2-3 months of coal inventory to sustain low costs.

Ambuja Cements' existing capacity reached 107 MTPA, with a revised target of 155 MTPA by FY28, up from the previous 140 MTPA. This expansion includes an additional 15 million tons through debottlenecking at a capex of $48 per ton on an integrated basis. Clinker capacity is also targeted to increase from 84 million tons to 96 million tons by FY28, with three new kilns contributing approximately 12 million tons. Several greenfield and brownfield expansions, including Salai Banwa, Dahej, and Jodhpur, are progressing for commissioning by the end of the financial year.

The share of Green Power in the energy mix increased to 33% in Q2, up 14.3% YoY, with a target to reach 60% by FY28. This is expected to reduce unit costs by ₹1.5 per unit, from ₹6 to ₹4.5, by FY28. The company is also focusing on ESG improvements, including being 12x water positive and plastic negative. Additionally, initiatives like the Cement Intelligent Network Operations Center (CINOC) are being implemented to enhance efficiency and productivity across the value chain.

The company's market share increased by 1% to 16.6% in Q2, with a target to reach 20-22% by FY28. This growth is supported by concerted branding and marketing efforts, including digital and mass media campaigns reaching 300 million individuals. The RMC business contributed 4.5% to revenues in H1, up from 4% in FY25, with a target for cement consumption in RMX to reach 5% of full-blow capacity by FY28. The company also continues to engage with contractors and academia to strengthen its ecosystem.

The integration of Penna and Orient Cement has been rapid, with sales now largely under Ambuja and ACC brands. While acquired assets currently have lower EBITDA, management expects their profitability to improve with capacity utilization, targeting an EBITDA of ₹1,500 per metric ton for these assets by FY28. Sanghi Industries is also expected to achieve a substantial positive zone from Q3, leveraging its potential to become a low-cost clinker producer.

Cash and cash equivalents decreased from ₹2,971 crores to ₹1,813 crores between June and September, primarily due to ongoing capex programs, which amounted to ₹1,400 crores in Q2 and ₹2,800 crores in H1. The company maintains a debt-free status with a CRISIL AAA Stable rating. The increase in working capital was attributed to higher receivables from non-trade sales and increased inventory, including finished goods, during the monsoon-affected quarter.