Ambuja Cements Q1 FY26 Conference Call Highlights

Ambuja Cements is part of the diversified Adani portfolio and ranks among the top nine building material companies globally. It is the only Indian cement company with science-based net-zero and near-term targets validated by SBTi, reflecting strong ESG alignment.

Q1 FY26 Performance Highlights

• Strong Start to FY26: Achieved record quarterly revenue, EBITDA, and market share gains, supported by:
  • Robust volume growth.
  • Price improvements.
  • Higher premium product sales.
  • Agile supply chain and cost efficiencies.
  • Integration of Orient Cement (acquired April 2025).
• Demand Outlook: Upgraded industry demand growth estimate from 6–7% to 7–8% for FY26.

Financial Highlights (Consolidated)

• Sales volume: 18.4 MTPA, up 20% YoY, market share up to 15.5% (+2%).
• Revenue: ₹10,289 crore (+23% YoY), with a 4% price gain; premium products now 33% of trade sales (+43% YoY).
• Cost Efficiency: ₹119/tonne YoY improvement.
• EBITDA: ₹1,961 crore – highest quarterly EBITDA; ₹1,069/tonne (+28% YoY); margin at 19.1% (+3.8pp).
• PAT: ₹970 crore (+24% YoY); EPS ₹3.20 (+22% YoY).
• Balance Sheet: Net worth ₹66,436 crore; debt-free; CRISIL AAA/A1+ ratings.

Operational Achievements

• Lead cement supplier for the Chenab Railway Bridge.
• Recognized as most trusted cement brand (TRA Research, 4th year running).
• Strengthened partnership with CREDAI, launching “NirmA Anotsav” across 20+ cities.
• First in the industry to adopt AI-enabled Digipin in supply chain.

Capacity Expansion

• Current capacity: 104.5 MTPA.
• Target: 118 MTPA by FY26, 140 MTPA by FY28 through brownfield projects at multiple sites (Bhattapada, Salai Banwa, Dahej, Marwad, Kalamboli, Krishnapatnam, Bhatinda, Jodhpur, Warishali Ganj).
• Commissioned 5 MTPA grinding capacity in the last 3 months; another 13 MTPA targeted for FY26.
• Strategic capex management to ensure timelines and profitability.

Cost Leadership Initiatives

• Focus on reducing power, fuel, logistics, and raw material costs.
• Lowest manpower cost among peers at ₹223/tonne.
• Green power share up 9.7% to 28.1%; target 60% by FY28 → reduce power cost from ₹5.9/unit to ₹4.5/unit.
• Coal cost down from ₹1.73 to ₹1.59 per 1000 kcal.
• Heat consumption to improve by 35–40 kcal/kg clinker via new kilns and upgrades.
• Lead distance reduced by 8 km to 269 km; further reduction to 50 km expected by FY28 → potential logistics saving of ₹150/tonne.

ESG & Sustainability

• 473 MW renewable capacity commissioned (target 1,000 MW; 60% share by FY28).
• Industry leader in water positivity (12x) and plastic negativity (11x).
• Active collaborations with WEF, UNGC and others.
• Major community programs in education, healthcare, livelihood, and infrastructure:
  • Robotic labs, drone labs, rural KPOs, youth/women skill initiatives.
  • New educational facilities including DAV ACC Public School at Kalpashila.
  • Adani Vidya Daan program supports 10,000+ students.

Channel & Brand Engagement

• CEO se Samvad platform boosted dealer relationships; over 500 dealers returned.
• Adani’s certified ACP technology implemented at 21,000+ sites.
• 325+ building workshops for 9,000+ contractors.
• CEO Club recognition program for top partners.
• Large-scale dealer family engagement via Dhan Varsha Grah Lakshmi Saubhagya Awards (50,000+ families reached).
• Influencer programs involving 25,000+ participants.

Industry Outlook

• Cement demand up 4% YoY in Q1 FY26, driven by government infrastructure schemes (PMAY, PMGSY, Bharatmala, Sagarmala).
• Company remains bullish with upgraded demand growth forecast.

CFO Commentary

• Reinforced focus on growth, cost leadership, ESG, and stakeholder value.
• Inorganic growth via acquisitions (Sanghi, Asian, Tuticorin, Penna, Orient) progressing ahead of schedule.
• 40% of capacity now consists of new-generation assets with higher efficiency and renewable energy use.
• Renewable power at 28.1% share; WHRS capacity at 228 MW.
• Digital transformation: End-to-end value chain digitization with real-time monitoring via the Cement Network Operating Center.
• Maintains strong financial health: Net worth ₹66,500 crore; cash & equivalents ₹3,000 crore after capex, acquisitions, and dividends.

Strategic Priorities

1. Sustain high EBITDA margins through cost control and premium product mix.
2. Achieve 140 MTPA capacity by FY28 with balanced regional spread.
3. Drive ESG leadership through green energy, reduced carbon footprint, and community programs.
4. Enhance market presence via brand strength, dealer loyalty programs, and innovative technology.
5. Maintain debt-free growth while funding expansions and acquisitions.

Question and Answer Session Highlights

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Q:
On a sequential basis, there is an increase in power, fuel, logistics, and other opex, even after adjusting for volumes. What caused this?

A:
The increase is due to the Orient Cement acquisition this quarter, which wasn’t in last quarter’s base. Acquired assets bring some short-term cost disruptions.

• Fuel cost reduced from ₹1.73 to ₹1.59 per 1000 kcal.
• Power cost is temporarily higher due to higher consumption at acquired assets, but we aim to reduce this by at least 5 units in coming quarters.
• Other expenses rose due to marketing, brand spend, supply chain investments, and inclusion of Orient’s costs.
  These will normalise quickly, with improvement expected in the current quarter.

Q:
Without Orient, how would costs look? When will they normalise?

A:
Significant improvement is expected this quarter itself. Integration has gone well, contributing to 20% volume growth. Cost stabilisation will follow in the next few months.

Q:
What were Orient’s volumes this quarter?

A:
We won’t disclose separate Orient volumes as it’s now under Ambuja/ACC branding. Overall, assets are running healthily with good clinker and cement utilisation.

Q:
Industry grew 4% YoY; Ambuja Consol volumes grew 20% unadjusted. What’s the adjusted figure?

A:
Adjusted for acquisitions, volume growth is about 13%.

Q:
Why have consolidated quarterly volumes changed in the presentation compared to last quarter?

A:
We’ve moved to reporting only cement sales, excluding clinker, in line with industry practice. Earlier, CLC (clinker + cement) was reported. March quarter’s cement sales were 18.2 MTPA; now Q1 FY26 is 18.4 MTPA purely cement.

Q:
If we exclude Orient and Penna’s volumes, growth appears ~1–1.5% YoY. Is that correct?

A:
No, excluding acquisitions, growth is still ~13% YoY.

Q:
What were Penna’s volumes?

A:
We provide only consolidated volume/capacity figures: 18.4 MTPA sales with ~77–78% utilisation on ~95 MTPA average capacity.

Q:
Updated timelines for capacity commissioning?

A:
Of the planned 18 MTPA, 5 MTPA is already commissioned; 13 MTPA is progressing well. Expect major commissioning by December 2025 (Salai Banwa, Penna Jodhpur, Bhattapada, others). Target remains 118 MTPA by March 2026.

Q:
Is Bhattapada delayed due to Chinese equipment/vendor restrictions?

A:
No vendor issues; project is on schedule apart from normal 1–2 month brownfield adjustments.

Q:
Cash position at June-end?

A:
Around ₹3,000 crore after Orient acquisition, ~₹2,000 crore capex in Q1, and ₹550 crore dividend payout.

Q:
When was Orient consolidated?

A:
22nd April 2025.

Q:
Capex outflow for Penna in FY26?

A:
Balance Penna payments will be made per DSPA terms. Clinker from Penna due by end-Q2 FY26. Total FY26 capex ~₹9,000–₹10,000 crore including Penna.

Q:
Volume outlook for the year excluding clinker sales?

A:
At 75–78% utilisation on 118 MTPA target capacity.

Q:
Capex for Orient and ACC?

A:

• Orient: FY26 focus on cost efficiency and debottlenecking; growth capex likely from FY27.
• ACC: Salai Banwa commissioning soon; Sindri expansion completed; Wadi Line 1 dismantling done, expansion in FY27. Capex split ~75% Ambuja, 25% ACC.

Q:
Why did ACC’s raw material and other costs spike sequentially?

A:
Due to scheduled maintenance (e.g., Wadi plant), VRS/employee settlements, and higher brand/channel investments.

Q:
How is clinker being substituted with certain ACC kilns shut?

A:
Through clinker movement between Ambuja and ACC under MSAs, optimising logistics and cost.

Q:
Any update on marketing structure simplification to 3 layers?

A:
We are simplifying and reimagining the organisation, but details are internal. Positive impact expected.

Q:
How have post-quarter realisations trended by region?

A:
Premium cement and brand strength support better realisations. We’ve increased premium product prices and maintained discipline in pricing.

Q:
Is the ₹3,000 crore cash balance consolidated including Orient?

A:
Yes, mostly with Ambuja and ACC; minimal cash with Sanghi, Penna, Orient as they were made debt-free.

Q:
Progress towards ₹530/tonne cost saving target?

A:
We’ve achieved 35–40% (~₹175–₹200/tonne) so far, mainly from green power, fuel cost, logistics, and raw material optimisation. Target remains unchanged even after acquisitions.

Q:
‘Other expenses’ in the presentation exclude new assets and one-time gains. What’s the difference?

A:
₹110 crore delta is due to excluding last year’s one-time gain and costs from new assets, which are non-recurring.

Q:
Why is ACC’s profitability lower than Ambuja’s?

A:
Ambuja benefits from captive coal mines, lower power cost (₹5.30/unit vs. ACC’s ₹6.10), higher WHRS share, and efficiency. We’re investing to bridge the ₹300–₹400/tonne gap.

Q:
Preparedness for next 21 MTPA expansion (FY27–28)?

A:
Groundwork done: land, approvals, civil work, vendor negotiations. Capacity to be regionally balanced across North, Central, West, and others.

Q:
How is brand integration in South post-Penna acquisition?

A:
Very positive. Penna and Orient fully migrated to Ambuja/ACC brands, strengthening dealer network and price realisation.