Orient Cement

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^🌐.

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.

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.

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.

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.

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.

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.