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Ambuja Cements Ltd — Q4 FY26
Ambuja Cements reported a disappointing Q4 FY26 with cost per ton surging to ₹4,500, well above the earlier target of ₹4,100, driven by higher freight, packing costs from the West Asia crisis, and elevated repairs at acquired assets (Sanghi, Penna).
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Ambuja Cements reported a disappointing Q4 FY26 with cost per ton surging to ₹4,500, well above the earlier target of ₹4,100, driven by higher freight, packing costs from the West Asia crisis, and elevated repairs at acquired assets (Sanghi, Penna). Annual sales volume hit a record 73.7 million tons (+16% YoY), but EBITDA per ton at ₹887 missed expectations. Management admitted to execution failures, resetting capacity expansion timelines and guiding for only 8% volume growth in FY27 to ~80 million tons, below industry growth of 5-5.5%. Cost reduction of ₹250/ton is targeted for FY27, but Q1 is expected to remain flat at elevated levels. The key risk is that pricing power remains weak, with only ₹10/bag improvement, and cost inflation may persist if global energy prices stay high.
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Cost inflation from West Asia crisis
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Annual Sales Volume
73.7M tons
+16% YoY
Highest ever annual volume, growing ahead of industry.
EBITDA per ton
₹887
+12% YoY
Normalized EBITDA/ton improved but missed internal targets.
Premium Cement Share of Trade
36%
+1pp QoQ
Premium mix sustained at 36% in Q4, supporting realizations.
Green Power Share
32%
+6pp YoY
Green power share increased to 32% in Q4 from 26% last year.
What Changed vs Last Quarter
NEW
FY27 volume target of ~80 million tons
Management expects 8% volume growth to ~80 million tons in FY27, driven by stabilization of acquired assets and new capacities.
NEW
Cost reduction of ₹250/ton in FY27
Targeting ₹250/ton reduction in average cost from Q4 FY26 exit of ₹4,500/ton, reaching ~₹4,250/ton for FY27.
NEW
Capex of ₹6,000-6,500 crore for FY27
Capital expenditure for FY27 estimated at ₹6,000-6,500 crore, focused on completing ongoing projects and debottlenecking.
NEW
Capacity to reach 119 million tons by end FY27
Cement capacity expected to increase to 119 million tons by end of FY27, including 10 million tons of new grinding units.
DROPPED
Cost target of ₹4,000/ton by March 2026
Management targets total cost of ₹4,000 per metric ton by end of FY26, a 5% reduction from current ₹4,200/ton.
DROPPED
Capacity target raised to 155 MTPA by FY28
Cement capacity target revised from 140 to 155 million tons per annum by FY28, including 15 MTPA from debottlenecking.
DROPPED
Double-digit volume growth expected
Management expects to sustain double-digit volume growth in coming quarters, though not necessarily 20% as base expands.
DROPPED
Green power share to reach 60% by FY28
Renewable energy capacity expected to reach 900 MW by end of FY26 and 1,122 MW by FY27, targeting 60% green power share by FY28.
NEW RISK
Cost inflation from West Asia crisis
Packing bag costs and fuel prices surged in March due to geopolitical tensions, adding ~₹250/ton to costs. Further escalation could delay cost reduction targets.
NEW RISK
Weak pricing power amid soft demand
Despite cost inflation, cement prices have only increased by ₹10-15/bag in select pockets. Management expects subdued demand in April-May, limiting ability to pass on costs.
NEW RISK
Execution delays in capacity expansion
Projects have been delayed due to contractor issues, incomplete engineering, and lack of team bandwidth. Management has reset timelines, but further slippages could impact volume growth.
NEW RISK
Higher-than-expected costs at acquired assets
Sanghi and Penna plants have lower utilization (57% and 46% respectively) and higher maintenance costs. Turnaround has taken longer than anticipated, weighing on overall margins.
RISK GONE
Delay in capacity commissioning
Six projects delayed by a quarter due to torrential rains and floods, posing risk to timely capacity additions.
RISK GONE
Working capital increase
Working capital increased by ~₹2,000 crore in H1 due to higher receivables and inventory, which could pressure cash flows if not managed.
RISK GONE
Lower capacity utilization of acquired assets
Overall capacity utilization at 65-67%, with acquired assets like Sanghi underperforming; improvement needed to achieve operating leverage.
RISK GONE
Fuel cost volatility
While coal costs are currently low, any reversal could impact the cost reduction trajectory and margin expansion.
Fast read
Guidance and risk preview
Management expects 8% volume growth to ~80 million tons in FY27, driven by stabilization of acquired assets and new capacities.
Packing bag costs and fuel prices surged in March due to geopolitical tensions, adding ~₹250/ton to costs.
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