Ambuja Cements

Ambuja Cements reported a consolidated revenue of INR 9,329 crores in Q3 FY25, driven by a strong focus on micro market management and an expanded dealer network. Operational cost per ton stood at INR 4,618, benefiting from a 7% decline in energy costs and a 10% reduction in kiln fuel costs. Transportation costs also decreased by 6% due to footprint optimization, reducing lead distance by 4 kilometers. These efficiencies contributed to an EBITDA of INR 1,712 crores, an 18.4% margin, and an EBITDA per ton of INR 1,038.

The company is on track to achieve its target of 140 million tons capacity by FY28. By Q4 FY25, total capacity is expected to reach 104 million tons. Key projects nearing completion include a 4-million-ton clinker unit in Bhatapara (78% progress) and grinding units in Sankrail (82%) and Farakka (87%), all expected to be commissioned by Q4 FY25. Further expansions, including grinding units in Salai Banwa (Q1 FY26), Bathinda, Marwar (Q2 FY26), Kalamboli, Dahej, Jodhpur Penna, and Krishnapatnam (Q3 FY26), along with a new 4-million-ton clinker unit at Maratha, will bring total capacity to 118 million tons by end of FY26.

The acquisition of Orient Cement is in an advanced stage, and its completion will increase the operating cement capacity to 97 million tons. The company is actively integrating recent acquisitions like Sanghi, Penna, Asian, and Tuticorin. These acquired assets, currently operating at sub-40% utilization, are undergoing efficiency investments and are targeted to reach over 70% utilization by the next financial year. Mergers involving Penna Cements, Adani Cementation, and Sanghi are under regulatory review and are expected to be consummated in the next financial year.

Ambuja Cements commissioned 200-megawatt solar power at Khavda, Gujarat, in Q3 FY25, contributing to its goal of 1,000 megawatts of RE power by June 2026. Waste Heat Recovery System (WHRS) capacity is targeted to increase from 197 megawatts to 218 megawatts by March 2025. These initiatives are projected to increase green power's share to 60% of total power requirements and 83% for clinkerisation, leading to a reduction in power costs by INR 100 per ton by FY28. The company also focuses on waste-derived resources and alternate fuels.

The company maintains a strong financial position with nil debt and a AAA credit rating. Consolidated cash and cash equivalents stood at INR 8,755 crores as of December 31, 2024. Net worth grew significantly to INR 63,000 crores from INR 51,000 crores in April. The capital expenditure target for FY25 is INR 8,000 crores, with INR 6,200 crores already spent in the first nine months. An additional INR 2,000-2,500 crores is anticipated to be spent in Q4 FY25, primarily on ongoing capacity expansion and green energy projects.

Management anticipates a rebound in cement demand, expecting 4-5% growth in FY25, with the second half outperforming the first, driven by improved consumption in housing and infrastructure segments and increased government spending. The company aims to grow at a faster pace than the industry, leveraging its expanded capacity and cost leadership. However, the industry faces short-term sentiment pressure due to a demand-supply mismatch and new capacity additions, which management expects to normalize as investments yield returns.