Concall AI

Orient Cement Limited — Q4 FY26 earnings call

Call held 10 May 2026

Management summary

Ambuja Cements delivered a resilient Q4 FY26, achieving its highest ever annual sales volume of 73.7 million tonnes, a 16% YoY increase, alongside robust EBITDA and PAT growth of 31% and 17% respectively. Despite these gains, the quarter was marked by significant cost escalations, particularly in March, driven by higher freight, packing, and fuel costs, which impacted profitability and prevented full price pass-through. The company also faced challenges with lower utilization and higher maintenance needs for newly acquired assets, as well as delays in its capex projects, leading to a recalibration of its ambitious capacity expansion plans.

Highlights

Achieved highest ever annual sales volume of 73.7 million tonnes, representing a 16% Y-on-Y growth.
Reported strong EBITDA of INR6,539 crores, a 31% increase, with EBITDA per metric ton at INR887, up 12%.
Net profit (PAT) grew by 17% to INR2,647 crores for the financial year.
Maintained a debt-free status and highest credit rating, indicating strong financial health.
Increased green power share to 32% in Q4, up from 26% previously, demonstrating progress in sustainability efforts.

Concerns

Experienced significant cost escalation in Q4, particularly in March, with costs reaching INR4,500 per tonne, attributed to higher freight, packing, fuel, and branding expenses.
Newly acquired assets (Sanghi and Penna) showed lower utilization levels (57% and 46% respectively) and required higher-than-expected maintenance capex.
Delays of 3-6 months in efficiency capex and overall project execution due to issues with contractor selection, team building, and incomplete engineering.
Softer market demand in April/May made it challenging to fully pass on cost increases through pricing, putting pressure on margins.

Key financials

3 periods

Headline

Annual Sales Volume
73.7 million tonnes
YoY +16%
EBITDA
₹6,539 Cr
YoY +31%
EBITDA per Tonne
₹887
YoY +12%
PAT
₹2,647 Cr
YoY +17%
Cement Capacity
109 million tonnes

FY26

Cost per Tonne
₹4,400
RMX EBITDA
₹300 Cr

March Q4 FY26

Cost per Tonne
₹4,500

What they filed

Q1 FY27: revenue down 30.3%, net profit down 62.4% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	544	643	825	866	643 +18%	636 −1%	647 −22%	604 −30%
Expenses	500	585	722	684	478	546	539	460
EBITDA	44	58	103	182	165 +275%	90 +55%	108 +5%	144 −21%
Margin	8%	9%	12%	21%	26%	14%	17%	24%
Other income	4	3	8	2	12	-4	6	5
Interest	6	6	6	3	3	2	5	3
Depreciation	39	38	37	37	101	48	45	43
Profit before tax	3	17	68	144	74 +2367%	36 +112%	64 −6%	103 −28%
Tax rate	26%	39%	38%	-42%	33%	23%	13%	25%
Net profit	2	10	42	205	49 +2350%	28 +180%	55 +31%	77 −62%
EPS	0.11	0.49	2.05	9.98	2.39	1.35	2.70	3.75

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
- New grinding capacity (10.7 million tonnes) and additional clinker capacity (7 million tonnes)
- Stabilizing acquired assets (Sanghi, Penna)
- Efficiency capex, bulk cement terminals, WHRS, fly ash transportation system, debottlenecking, maintenance capex
- New clinker line in Mundra and Assam
During the year, company's cement capacity increased to 109 million tonnes, supported by commissioning of 10.7 million tonnes of new grinding capacity at various locations like Marwar, Farakka, Sankrail, Sindri, Krishnapatnam and the additional clinker capacity of 7 million tonnes at Jodhpur and Bhatapara. ... 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 for FY '27, we are keeping an estimate of almost INR6,000 crores to INR6,500 crores.
Debt Debt disclosed

The company continues to remain debt-free and with highest credit rating.
M&A Sanghi Industries and Penna Cement Acquisition · Integrated

Portfolio integration and capacity expansion
Witnessed lower utilization levels (Sanghi 57%, Penna 46%) and required higher maintenance capex.

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 and strategic initiative for sharper focus

while ACC and Orient Cement is under process.

Guidance & targets

Volume

Consolidated Volume Growth Volume · FY27 · High confidence 8% to around 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

Previously 140-155 million tonnes → 119 million tonnes

We are expecting to hit capacity of almost 119 million tonnes by end of FY '27.

— Vinod Bahety

Cost

Cost Reduction Cost · FY27 · High confidence INR250 a 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.

— Karan Adani
Cost Reduction Cost · FY28 · High confidence another INR250 a tonne

— Karan Adani
Target Cost per Tonne Cost · FY27 · High confidence INR4,250 a tonne

Previously INR4,500 a tonne → INR4,250 a tonne

So essentially, then it would mean INR4,250 as a target for '27.

— Vinod Bahety

Acquired Assets Utilization

Utilization Increase Acquired Assets Utilization · null · Medium confidence 5% to 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

Capex

Capex Plan Capex · FY27 · High confidence INR6,000 crores to INR6,500 crores

So for FY '27, we are keeping an estimate of almost INR6,000 crores to INR6,500 crores.

— Vinod Bahety

Clinker Capacity

New Clinker Capacity (Assam) Clinker Capacity · 2-3 years · Medium confidence 2 million tonnes

And then the Assam one, which will be another 2 million. So that will be pair of additional new assets. ... Let's say 24 to 28 years, 28 months is what we are targeting.

— Vinod Bahety
New Clinker Capacity (Mundra) Clinker Capacity · 2-3 years · Medium confidence 2 million tonnes

And the second new area that we will be starting is in Mundra, which is, again, a completely new clinker line. So these are the 2 new projects apart from the new GUs that will help us in terms of reducing our costs. ... Let's say 24 to 28 years, 28 months is what we are targeting.

— Vinod Bahety

What to watch in Q1 FY27

Acquired Assets Utilization Improvement

Next few months

Current Sanghi 57%, Penna 46%

Target Increase by 5-10%

Why it matters

Key to improving overall capacity utilization and profitability, as these assets currently drag performance.

The newly acquired assets, particularly Sanghi and Penna, they witnessed lower utilization levels. ... The target is to increase the utilization by at least 5% to 10% for these assets.

Risks & concerns

Cost escalation due to higher freight, packing, fuel, and branding
high

Q4 saw INR4,500/tonne costs, up by INR25/bag, due to increased freight, packing (West Asia war), fuel consumption, and branding efforts.

Management acknowledged
Lower utilization and higher maintenance for newly acquired assets
high

Sanghi at 57% and Penna at 46% utilization, requiring higher-than-expected maintenance capex and longer turnaround times.

Management acknowledged
Delays in efficiency and growth capex projects
high

3-6 months delay in efficiency capex and overall project delays due to contractor issues, lack of initial team, and incomplete engineering.

Management acknowledged
Soft market demand and inability to pass on price increases
medium

Softer demand in April/May creates pressure on pricing, making it difficult to fully offset cost increases.

Management acknowledged
Raw material cost optimization hindered by railway infrastructure delays
medium

Fly ash costs not at desired levels due to pending railway infrastructure, which is expected to improve in coming months.

Management acknowledged

Q&A highlights

8 direct

Volume growth and capex recalibration Direct

So, Navin, our primary focus remains organic in terms of stabilizing our ongoing expansions and also already acquired assets. So therefore, I would say that, that remains the primary focus. I think we have a good headroom to improve our overall, say, market share by improving the capacity utilization of these plants.

Analyst questioned the shift from aggressive capacity targets (140-155 MT) to a more conservative 119 MT by FY27, and management clarified focus on organic growth and asset stabilization.

Asked by Navin Sahadeo

Cost structure and reconciliation of Q4 costs Direct

So Raashi, like as I said, the INR4,500, which is for the March quarter has already taken the hit of existing increases of almost, say, INR250. So I would say that INR4,500 safely, I would say, is on a peak basis, let us say, on a higher basis, which we have seen, barring like any aberration of plus/minus INR50.

Analyst challenged the high Q4 cost (INR4,500/tonne) against prior guidance, and management explained it as a peak due to various factors, with an expected reduction.

Asked by Raashi Chopra

Pricing power and ability to pass on cost increases Direct

So Pinakin, I would say that given the scenario of demand will be very important to basically see the price being passed on to the customers. And as of now, I anticipate the overall demand looks to be for right now, when I look at, say, April and now in May, a little subdued and soft. Therefore, for example, when you attempt for, say, X, I would be happy even if the industry gets half of the same.

Analyst probed on the company's ability to raise prices amidst cost inflation, and management indicated soft demand made it difficult, emphasizing internal cost control.

Asked by Pinakin

Acquired assets performance and capex delays Direct

The turnaround initiatives have taken a little longer than the expected time lines. And some of these plants, especially of Penna, needed higher than expected time for maintenance capex and overall upkeep of the assets. So on a cost front, we have seen a bit of higher cost compared to our own expectations and therefore, some disappointments.

Analyst questioned the low utilization of acquired assets and delays, leading management to acknowledge challenges and higher-than-expected costs for stabilization.

Asked by Jashandeep Singh Chadha

Reset in ambition for capacity growth Direct

So we'll be honest with you. Yes, partially, there is a reset. We are not moving away from the target. Yes, we are moving away from the time line. That is to do with the we know that we are not delivering in terms of what we have what we had committed.

Analyst asked if the company's aggressive growth ambition had been reset, and management confirmed a partial reset in timeline due to past underperformance and a focus on execution.

Asked by Amit Murarka

Reconciliation of cost reduction target with current inflation Direct

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.

Analyst sought clarity on whether the INR250/tonne cost reduction for FY27 was net of current inflation, which management confirmed, setting a new target cost.

Asked by Rajesh Ravi

Delays in capex projects and underlying reasons Direct

So you're right. Your observation is right that capex our capex has not been up to the mark, and that's one of the reasons why we are pausing and correcting ourselves, and we want to first complete our projects that we have taken in our hand before we start any new projects. 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.

Analyst challenged the repeated delays in capex projects, prompting management to admit to issues with contractor selection, lack of team, and incomplete engineering as root causes.

Asked by Raghav Maheshwari

Recalibration of capacity locations for logistics optimization Direct

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. I don't think so we are looking at recalibration of, let's say, clinker units.

Analyst questioned the strategic shift in capacity locations, and management explained it as an effort to optimize logistics costs by moving grinding units closer to markets.

Asked by Satyadeep Jain

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Detailed narrative

Q4 FY26 Performance Overview and Annual Highlights

Ambuja Cements delivered a resilient performance in Q4 FY26, achieving its highest ever annual sales volume of 73.7 million tonnes, marking a 16% year-on-year increase. The company reported an EBITDA of INR6,539 crores for the full year, up 31%, with EBITDA per metric ton reaching INR887, a 12% increase. Net profit (PAT) for the year stood at INR2,647 crores, up 17%. The company maintained its debt-free status and highest credit rating, reflecting strong financial management despite market challenges.

Cost Headwinds and Mitigation Strategies

The quarter, particularly March, saw significant cost escalation, with costs reaching INR4,500 per tonne, up by approximately INR25 per bag. This was primarily attributed to higher freight costs due to increased sale lead, higher packing costs influenced by global events, elevated fuel consumption from higher-than-expected heat, and increased branding and sales promotion expenses. Management views INR4,500/tonne as the peak and targets a INR250/tonne reduction in FY27, aiming for an average cost of INR4,250/tonne, through efficiency improvements and raw material optimization, including addressing fly ash sourcing issues.

Capacity Expansion, Utilization, and Strategic Recalibration

Ambuja Cements' total capacity increased to 109 million tonnes in FY26, supported by commissioning 10.7 million tonnes of new grinding capacity and 7 million tonnes of clinker capacity. However, newly acquired assets like Sanghi and Penna showed lower utilization levels, at 57% and 46% respectively, requiring higher-than-expected maintenance capex. The company has recalibrated its ambitious capacity expansion plans, now targeting 119 million tonnes by end of FY27, a shift from earlier targets of 140-155 million tonnes, with a focus on optimizing current capacities and disciplined capital allocation.

Market Dynamics, Pricing, and Volume Outlook

The company noted softer market demand conditions in April and May, which limited its ability to fully pass on cost increases through pricing. Modest price improvements of INR10-20 were observed only in select geographies. Despite this, Ambuja Cements targets an 8% volume growth to around 80 million tonnes for FY27, outpacing the anticipated industry growth of 5-5.5%. The strategy emphasizes value with trade volumes and premium cement, which accounted for 35% of trade sales in Q4.

Portfolio Integration and Operational Efficiency Initiatives

The amalgamation of Sanghi Industries and Penna Cement with Ambuja Cements is complete, while the ACC and Orient Cement amalgamation is in process, forming part of the 'One Cement' platform aimed at enhancing operational performance. The company is also focusing on improving trade sales, which reached 74% in Q4 (up from 68% in Dec Q25), and sustaining premium cement sales at 36% of trade sales. Green power share increased to 32% in Q4, up from 26% previously, contributing to efficiency.

Capex Delays and Future Project Pipeline

Management acknowledged delays in capex projects, attributing them to initial challenges with contractor selection, lack of a dedicated team post-acquisition, and incomplete engineering. FY26 capex was approximately INR7,500 crores, with FY27 capex projected at INR6,000-6,500 crores. New clinker projects in Assam and Mundra, each adding 2 million tonnes, are planned for the next 2-3 years (24-28 months), alongside ongoing expansions and debottlenecking efforts.

Logistics and Raw Material Optimization

A strategic recalibration of logistics is underway, with plans to shut down grinding units in some locations and establish new ones closer to markets (e.g., North UP, Bihar, Southern Gujarat/Maharashtra). This aims to reduce high logistics costs associated with integrated units. Efforts are also focused on optimizing raw material costs, particularly fly ash, with improvements expected as pending railway infrastructure is completed in the coming months.

This is an AI-generated summary of a publicly available earnings call transcript.

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