Orient Cement Limited

Ambuja Cements reported a robust Q1 FY26, with sales volume growing 20% YoY to 18.4 million tonnes and revenue increasing 23% YoY to ₹10,289 crores. This performance was significantly boosted by the seamless integration of Orient Cement, acquired in April 2025, and a 4% price gain. The company achieved its highest-ever quarterly EBITDA of ₹1,961 crores, with EBITDA per metric tonne improving 28% YoY to ₹1,069, and EBITDA margin expanding 3.8% to 19.1%.

The company's total cement capacity reached 104.5 MTPA after commissioning 5 million tonnes of grinding capacity in the last three months, and it targets an additional 13 million tonnes this financial year to reach 118 MTPA by FY26 end, with a long-term goal of 140 MTPA by FY28. Concurrently, Ambuja commissioned 57.7 megawatt of wind energy, bringing its total renewable power to 473 megawatt and increasing green energy contribution to 28.1%, aiming for 60% by FY28 to reduce power costs from ₹5.9 to ₹4.5 per unit.

Ambuja Cements is actively pursuing cost leadership, targeting reductions in power, fuel, logistics, and raw material costs. The coal cost improved from ₹1.73 to ₹1.59 per 1000 kilo calories, and the primary lead distance was reduced by 8 km to 269 km this quarter. The company aims to further reduce logistics costs by ₹150 per metric tonne and lead distance by 50 km by FY28, supported by increased rail and sea logistics and AI-enabled supply chain management.

The company's inorganic growth strategy is progressing well, with Orient Cement successfully integrated in April 2025, and regulatory approvals for Sanghi and Penna acquisitions ongoing. Management noted that the integration of Penna and Orient has led to very positive brand penetration and improved volume and price realization in the South, contributing 7-8% to the overall volume improvement. The acquired assets are expected to complement the overall ₹530 per tonne cost reduction target, of which 35-40% has already been achieved.

Management addressed the profitability disparity between ACC and Ambuja, attributing it to Ambuja's captive coal mine advantage and ACC's higher power costs (₹6.10/unit vs. ₹5.30/unit) and lower WHRS factor (14% vs. 21%). The strategy for ACC involves significant investments and efficiency gains to bridge the ₹300-₹400 per ton EBITDA gap, aiming to achieve 4-digit EBITDA per ton sooner through cost efficiency, green power, and WHRS initiatives.

Ambuja Cements maintains a strong, debt-free balance sheet with AAA ratings and a net worth of ₹66,436 crores. The company's cash and equivalents stood at approximately ₹3,000 crores at the end of June, after accounting for the Orient acquisition, approximately ₹2,000 crores in capex for the quarter, and ₹550 crores in dividend payments. The FY26 capex plan is estimated at around ₹10,000 crores, including Penna-related payments, with a general 75:25 or 70:30 split between Ambuja and ACC.