Ambuja Cements Q2 profit falls 90% to Rs 236 crore as costs squeeze margins, high base comes into play
Ambuja Cements Q2 FY27 Results: The Adani Group-cement maker's Q2 net profit fell sharply due to higher fuel and logistics cost. The fall was also pronounced due to exceptional tax gain in the base quarter.
Ambuja Cements reported a 90 percent year-on-year decline in consolidated net profit to Rs 236 crore for the September quarter, as higher fuel and logistics costs weighed on profitability despite an improvement in its trade and premium product mix. The profit decline also needs to be seen against a high base. The year-ago quarter’s profit after tax included a reversal of income tax provisions worth Rs 1,697 crore, the company said.
The cement maker, part of the Adani Group, reported revenue from operations of Rs 9,197 crore for the second quarter of FY27, marginally higher than Rs 9,175 crore a year earlier. Operating EBITDA fell 28 percent to Rs 1,271 crore from Rs 1,762 crore, while EBITDA margin contracted to 13.8 percent from 19.2 percent. EBITDA per tonne declined to Rs 770 from Rs 1,061 in the year-ago quarter. Cement sales volume stood at 16.5 million tonnes, compared with 16.6 million tonnes a year earlier.
“Elevated fuel and logistics costs, driven by higher petcoke and coal prices, constrained coal availability, and increased diesel and packaging costs, continue to weigh on industry margins,” Ambuja Cements said in its media release. The company reported total costs of Rs 4,410 per tonne in the quarter. Excluding the impact of geopolitical conflicts, costs would have stood at Rs 4,182 per tonne. Ambuja is targeting a reduction in costs to Rs 4,250 per tonne by FY27.
Vinod Bahety, whole-time director and chief executive officer of Ambuja Cements, said the company remained focused on quality growth despite seasonal and external headwinds. “Strengthening trade and premium product mix improved revenue quality, while disciplined execution and cost management supported profitability,” Bahety said. Ambuja’s trade volumes increased 8.6 percent year on year, taking trade sales to 74 percent of total volumes, an increase of six percentage points.
Premium products accounted for 37 percent of trade sales, compared with 35 percent a year earlier. The company said it expects volumes to grow ahead of the industry in the second half of FY27, supported by stronger trade sales and calibrated institutional business. It also pointed to the possibility of further price increases following a recent Rs 10-15 per bag hike, with the industry expecting pricing to improve over the next couple of months.
However, near-term conditions remain challenging amid geopolitical conflicts, global uncertainty and higher energy costs. The company expects infrastructure spending, urbanisation, rural housing and industrial activity to support underlying demand. Ambuja commissioned 4.6 million tonnes per annum (MTPA) of capacity during the quarter through projects at Dahej, Salai Banwa and Kalamboli. Another 3.2 MTPA at Bathinda and Jodhpur Penna is being stabilised and ramped up, while 2.4 MTPA at Warisaliganj is expected to be commissioned in the second half.
The company said a higher share of renewable power, the ramp-up of new capacities and additional incentives are expected to support performance in the second half. Green power accounted for 61 percent of its power mix in the quarter, compared with 41 percent a year earlier. Separately, shareholders have approved the proposed amalgamation of ACC and Orient Cement with Ambuja Cements. The schemes will now proceed to the National Company Law Tribunal for final approvals and are expected to be completed in FY27, subject to regulatory and statutory clearances.
Bahety said the proposed merger was expected to be earnings-per-share accretive. Ambuja ended the quarter with a debt-free balance sheet, net worth of Rs 72,238 crore and cash and cash equivalents of Rs 1,070 crore.
