Orient Cement Limited

Ambuja Cements Group reported a strong Q2 FY26, with consolidated sales volume growing 20% YoY to 16.6 million tons, significantly outpacing the industry's 4% growth. Revenue increased 21% YoY to INR9,174 crores, supported by a 3% price gain and a 28% YoY growth in premium product volumes, which now constitute 35% of total trade sales. EBITDA per metric ton jumped 32% YoY to INR1,060, expanding the EBITDA margin to 19.2% from 14.7% in the prior year.

The company's existing capacity reached 107 MTPA, with a revised target of 155 MTPA by FY28, up from an earlier 140 MTPA. This expansion includes adding 15 million tons through debottlenecking at a low capex of $48 per ton on an integrated basis, and increasing clinker capacity from 84 million to 96 million tons by FY28. Several greenfield and brownfield projects, including Salai Banwa, Marwar Mundwa, and Dahej, are expected to be operational by the end of FY26, contributing 11.2 million tons in FY26 and bringing total capacity to 118 MTPA.

Total costs were reduced by 5% YoY, with kiln fuel cost (including AFR) reaching INR1.60 per 1,000-kilo calories, noted as the lowest among peers. Management targets further cost reductions to INR4,000 per metric ton by March '26, INR3,800 by March '27, and INR3,650 by March '28. Green Power's share in the energy mix increased to 33% in Q2, with a target of 60% by FY28, aiming for a cost reduction of INR1.5 per unit (from INR6 to INR4.5) by FY28.

The integration of Penna and Orient Cement has been rapid, with sales now primarily under Ambuja and ACC brands. While acquired assets like Penna and Sanghi currently have lower EBITDA, management expects their performance to improve with better capacity utilization, contributing to the FY28 EBITDA target of INR1,500. The company's market share increased by 1% to 16.6% in Q2, with a long-term target of 20-22% by FY28, supported by a strong supply chain network of 29,000 dealers and 7 lakh contractors.

Ambuja Cements launched CINOC (Cement Intelligent Network Operations Center) to drive efficiency, productivity, and stakeholder engagement through AI. The company is also focusing on workforce development, having hired approximately 1,300 Graduate and Diploma Trainees who are undergoing a one-year training program, contributing to a reduction in the average employee age to 38 years and expected productivity improvements. The HR cost per ton is noted as efficient, with further improvements anticipated from digitization.

Working capital saw an increase of INR2,000 crores in the first half, attributed to higher receivables from B2B customers during the monsoon-affected Q2 and increased finished goods inventory. Additionally, six key projects, including Bathinda and Krishnapatnam, experienced commissioning delays due to torrential rains and flood-like situations. However, management expects commercial production to commence before Q4 FY26, mitigating the impact of these delays.