Ladies and gentlemen, good day and welcome to the Ambuja Cements Limited Q4 FY 2026 earnings call hosted by JM Financial Institutional Securities Limited. As a reminder, all participants are lines which are on listen only mode. There will be an opportunity for you to ask questions after the presentation concludes.
To ask questions during the conference call, please signal an operator by pressing Star then zero on your telephone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Dharmesh of JM Financial. Thank you, and over to you.
Thank you, everyone. Without much delay, I will transfer the call to Mr. Deepak Balwani, Head of Investor Relations. Mr. Deepak, over to you.
Thank you, Dharmesh. On behalf of Ambuja Cements, I am pleased to welcome all the participants to our earnings call for the fourth quarter of FY 2026. Ambuja Cements is the ninth-largest building material solutions company globally and part of the diversified Adani portfolio.
Before we start, please note that this call may include forward-looking statements based on our current beliefs and expectations, which are not guarantees of future performance and may involve unforeseen risks and uncertainties.
We remain committed to further strengthening our disclosure standards and improving the quality of our capital market communication to the best interest. We are pleased to have with us on the call Mr. Vinod Bahety, Chief Executive Officer, and Mr. Rohit Soni, Chief Financial Officer. Now I invite Mr. Bahety to provide his valuable updates on the quarter performance.
Yeah. Thank you, Deepak. Thanks, Dharmesh. Good evening, everyone. FY 2026 was a year of resilience for the Indian cement sector, marked by industry consolidation and the GST 2.4 reforms on one side, while the adverse and the extended weather conditions, global geopolitical factors, and the various state elections also affected the industry and demand in some or the other way.
Against this backdrop, Ambuja delivered a resilient performance for the year, achieving its best ever annual sales volume of 72.7 million tons, up 18% year-on-year in that manner, and on a normalized EBITDA of INR 6,539 crores, up 31% at INR 867 per metric ton, which is on a currency basis up 12% and the PAT of INR 2,647 crores, up 17%.
The company continues to remain debt-free and with highest credit rating. Annual volumes grew well ahead of the industry. Trade sales volume grew steady at 10%, while the premium cement accounted for 35% of the trade sales during the year, reflecting sustained progress on premiumization.
During the year, Ambuja Cements' capacity increased to 109 million tons by commissioning of 10.7 million tons of new grinding capacity at various locations like Marwar, Patka, Sankrail, Mundra, Tirupattinam and the additional capacity of 7 million tons at Jodhpur and Gwalara.
During FY 2026, we also made meaningful progress on the portfolio integration. Successful amalgamation of Sanghi Industries and Penna Cement with Ambuja Cements is now completed while ACC and Orient Cement is under process.
The one cement platform is a strategic initiative and will help to bring sharper focus on the operational performance, business synergies, and the overall high degree of compliance risk. Therefore, this time the balance sheet of Ambuja Consol now has finalized purchase price allocation of Orient Cement and Penna Cement. Till December, it was on a provisional basis.
The numbers you will find marginally changed in our balance sheet between the classification of goodwill and the other intangible assets. While in the P&L, you will find some changes in terms of amounts for depreciation and the deferred tax accounting treatments. Other trends you will see in the notes to the accounts, you will see various accelerated provisional notes with respect to reversals because they are there in published financials.
Please also note FY 2025 and FY 2026 are not comparable like to like since FY 2025 does not have Orient Cement, while Penna Cement was acquired and accelerated from of August 2025, which is only seven and a half months of the FY 2025, as against 12 months for FY 2026.
While Orient Cement is only for 11 months in FY 2026 and was not there in FY 2025. Now let's again come back to the business part. Our green power share increased almost 22% now in Q4 compared to 26% before.
The newly acquired assets, particularly Sanghi and Penna Cement, witnessed lower utilization levels. Sanghi still remains at around the full year at 57% on cement capacity utilization, while Penna Cement is 46%. However, last time I mentioned to you that in December quarter we have seen a good improvement, especially for Sanghi.
The turnaround initiatives have taken a little longer than the expected timelines and some of these plants, especially of Penna Cement, needed higher than expected time for maintenance activities and overall upkeep of the assets. So on a cost front, we have seen bit of higher costs compared to our own expectations and therefore some disappointments.
Primarily, if I have to look at the reasons, higher freight costs due to increase in the overall freight, primary and secondary both. Especially in some of the states like critical goods freight, especially in Himachal.
In terms of the higher fuel cost, which we more so have seen that in the month of March, which has seen some abruptions given the West Asia war. The higher fuel cost on account of a little higher than expected heat consumption what we have, and more so heavily acquired.
The higher blending cost, because we have focused more on trade sales from the two ports. While we have also improved our trade sales to 74% compared to in December quarter of 65%, it was 68%. This would clearly mean we are focusing on blended cement. If you also see, my clinker mixture has improved from 67% in December quarter to now 69%.
This has also one of the cost, which is the clinker cost in the system which have gone up. Some of the other issues like the raw material cost, which we could have improved in terms of the fly ash pending some of the railway infrastructure which will be completed in coming months, and we will see a good level of improvement on that.
But pending that, we have not been able to meet some of the raw material costs to our desired levels. Essentially, there is a three to six months delay on some of the efficiency CapEx which has happened. Hopefully, in coming quarter, we should be gaining momentum to complete and get the benefits of it.
Therefore, in FY 2027, our focus firmly remains on streamlining the operations and margin expansion. We will continue to focus on trade sales and more so on the premium product sales which we have a huge leadership.
Almost 76% of my trade sales has been premium cement sale for Q4. We will continue to improve the reliability at Penna and Sanghi and the overall asset utilization. Together, they have 19 capacity and the target is to increase the utilization by at least 5%-10% for these assets.
In terms of the cost, while we are cognizant of the overall ongoing global geopolitical situation, and we have already seen a cost escalation in Q4, more so in the month of March almost by some INR per bag, closer to let us say about INR 400-INR 500 if you have to go on a full blown basis.
Cost increase is there in the industry and so is to our company. So we are recalibrating our cost for this financial year. I have mentioned earlier about our journey to achieve cost of almost INR 1,000 a ton by March 2026 exit. Meanwhile, in terms of the full year of 2026, we have achieved a figure of INR 4,100 a ton, which is almost a bit higher to our own target for the reasons which I have mentioned before.
Although in the month of March, we are closer to at INR 4,100 a ton. Since these are fast moving global situations and dynamism over the energy cost and other basic input cost heights in the fuel and diesel and all, therefore it will be very difficult to provide any long term estimates for right now.
At the same, things stabilizing over the next two, three quarters. Therefore, I would get back on cost transmission on certain components of cost. For example, which I have, A, is in terms of the overall raw material cost led by fly ash and in terms of the green energy cost, for example, which is going to be slightly improved further in our overall utilization. Therefore, I strongly believe INR 150-INR 200 savings will reflect in this component.
On our overall console volumes, we are expecting it to grow in FY 2028 or 2027 almost 8% to around 80 million odd tons. We are cognizant of demand which we will focus on value with trade volumes and premium cement. Therefore, we are expecting still moderate overall sales growth in the volumes part.
At an industry level, we believe that given the headlines of inflation and weak monsoon, the industry may grow at around say 5%-6%. We continue to remain committed to our end sales volume targets, supported by a sharper focus on higher utilization of the existing capacities while optimizing the new capacities and stabilizing them. Therefore, with this proposed ongoing additions of 10 million tons of GU, which you are aware of, which I have already shared with you in the investor day.
Some of them, for example, Salai, Dhanbad and Varkala, Ganj, and so on and so forth. We are expecting to hit capacity of almost 119 million tons by end of FY 2027. Double six expansion plans we are recalibrating in line with our approach to take the advantages of the recent railway policies on bulk cement terminals.
Additions pursued more gradual in terms of focusing on optimizing the current capacities in hand. This will also help in terms of a very disciplined allocation of capital and a steadfast commitment to maximizing the returns on the capital employed.
Looking ahead, India's long-term infrastructure story remains fundamentally very strong and secular. However, with the expected inflationary pressure, weak monsoon, the cement demand is expected to remain a little soft.
Against this backdrop, Ambuja remains focused on disciplined execution, earning blend acceleration, maintaining safe sales, having premium cement sales, and maintaining the cost and capital discipline. Thank you, and I will now hand it back to the moderator.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, please press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two.
Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait a few moments for the questions to assess this. We will take the first question from the line of Navin Saraf from ICICI Securities. Please go ahead.
So guys, just to inform you that we also have our full-time director and senior Mr. Karan Adani also on the call. He has just joined us, so I welcome Karan bhai. I just basically convey these opening remarks, and then now go on the Q&A. So over back to the moderator, please.
Yes. We have a question from Navin Saraf. Navin?
Yeah. Hi.
Please go ahead.
Yeah. Thank you for the opportunity. My first question was on the volume growth front. In this quarter, as per the investor deck, volumes have grown by about 10 or 15. But if I adjust them to the Orient Cement volumes, they are more like flattish on a year-over-year basis.
Here my question is that if we are seeing some pressure on volumes, because for FY 2027, we have given a guidance of 18 million tons, which is roughly a growth of 9% to 10%, against the backdrop that we are expecting a much faster industry growth of 5% to 6%. I am just wanting to request an overall color on your volumes.
Hello? Yeah, Navin. Sorry. Sorry for the snag. Navin, so you are right, absolutely. In terms of the volume, especially for this March quarter, it has been little muted. But now for the FY 2027, when I have given you indication of 15 million, which is around closer to, say, 18, we have the visibility in terms of A, stabilizing the acquired assets of Sanghi, Tana, which I told you.
B, the ongoing expansions which will be commissioned in the next few months. Let us say now to September, we will see the capacities will get commissioned, and we will also then stabilize them.
So I have the incremental volume also coming from these capacities that I mentioned, almost around 10 million tons. And of course, stabilizing the assets of Penna and Sanghi. So I am quite happy. Basically, we are expecting, although with a softer demand for the year. Did I answer your question, Navin?
Yeah. Thank you. My second question then was on the overall CapEx plan. As mentioned in the presentation, we are recalibrating our entire growth plan. We have visibility of taking this overall capacity to 119.
So I am just trying to understand by when will we get a color on the next leg of CapEx, because the first day when the assets was acquired, the vision was to think of double the capacity and take it to 150. We internally even increased it to 165, and now we are taking a slightly a step back.
So my question was, from a growth point of view, by when, first of all, can we get a color of the big picture or the next longer-term plan? To the same breadth, is it that we are more open to pursue inorganic growth, which helps to catapult that overall growth? Or we still believe organic is the way to go? That is it. Thank you.
Navin, our primary focus remains organic in terms of stabilizing our ongoing expansions and also already acquired assets. That I would say 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.
Therefore, as I said, we are going to follow a very disciplined capital allocation. Given the headwinds right now for the industry, it makes sense to push the pace of the CapEx without losing eyesight on the overall, say, market share and the volume improvement from the existing assets and the ongoing expansions. To answer your question, I think, maybe what I would say is that the target plans of FY 2028, it could move a year or two.
Let us say, on a safe estimate, I would say that if I 30, let us say it doesn't really matter. What matters is how you are able to ramp up the volume from your overall existing asset. I have a potential good assume to ramp up over there. Even if I hit 120 million by the end of 2027, it will give me a good leverage of the overall cement market opportunity.
Helpful, sir. Thanks so much.
Thank you. Next question is from the line of Raashi Chopra from Citi. Please go ahead.
Thank you. Just on the cement question, what is the clinker capacity as of now?
Rashi, as of now we are sitting on 73 million tons of clinker capacity.
You will be adding another 5 million this year.
Yes. At Marathwada and at Penna Marwar, we will be adding up almost 5 million. Penna Marwar is 3 million. Sorry, 2 million, and Marathwada is another 2 million, so we have 4 million.
Okay. You mentioned earlier on that the 56% utilization was for Sanghi for the year and Penna was 47%, is that correct?
Slightly true.
Okay. The next question on costs. For the full year, the cost was INR 3,400. For the quarter, what was the average cost, INR 4,500?
Raashi, we are sitting at almost INR 4,250 for the overall same quarter. First, some of this increases what we have seen from the overall explanation. I would like, let us say that a normalized was almost INR 4,250 includes another INR 250, which we have seen increases. Almost we are at now INR 4,200 or so for the quarter of March.
Right. You were saying that the industry costs have gone up by anywhere in the range of INR 400-INR 500. Is it safe to assume that because of this crisis, you will see another INR 200-INR 250 increase in costs, which will get offset by your fly ash green energy mix up? Is that how we should be thinking about it?
Sorry, I missed your question.
You indicated that we are at 2,500 now on cost. You said 150 to 200 is a reduction that you're expecting because of fly ash green energy, right? 150 to 200, but the overall industry cost has gone up by more, right? Because of the West Asia crisis. Is that 150 to 200 already factoring the increase in industry cost, or is 150 to 200 decline in your internal cost and then there's an increase in cost because of the war beyond this?
Raashi, like I said, this 2,500, which is for the March quarter, has already taken the hit of existing increases of almost INR 250. I would say that 2,500, actually, I would say is on a peak basis, that is on a higher basis, which we have seen other than any aberration of unnecessary increase.
Otherwise, you will see a journey which will actually start coming down in the coming quarters. Although, for example, with the overall situation, how the overall energy situation emerges, I would not give with conviction. I strongly believe that, yeah, this is like a peak which we have hit, and we could see a progressive improvement.
If I can just rephrase it, if nothing increases further in terms of global crisis, you will see a decline of the 150 to 200.
Yes, absolutely. Well summarized. Absolutely.
Okay. On the pricing, what has happened to offset these cost pressures? Cement pricing.
Very interesting, Raashi. You are hitting on both the right questions. On the pricing, like industry has seen a modest improvement of, I would say INR 10. If few pockets, let us say INR 15-20, that is in a very selected area geographies.
Otherwise, as of the quarter of March, around INR 7 to INR 10. With demand getting a little softer, the pressure on pricing definitely is higher. Despite the percentages of costs going up, unfortunately, industry is still under the running flex pressure and not able to pass on the price.
Got it. Just last question for me, what was the CapEx for the year?
The CapEx for the year, we are sitting at still moderate and ballpark. When you say CapEx, we are seeing for FY 2026. FY 2026 is closer to about INR 7,500 crores. I will just answer because there will be another question. For FY 2027, we are sitting estimate of almost INR 6,000 to INR 6,500 crores. That too will also, it is how things turn out. It may change a couple of hundred crores here and there. That is the estimate what we have.
Got it. Thank you.
Thank you. Next question is from the line of Indrajit Agrawal from CLSA. Please go ahead.
Hi. Thank you for the opportunity. Congratulations on increasing both sales and sales mix. On that note, if I look at Slide 27, realization has hardly moved quarter-over-quarter versus previous years it is somewhere between 1.5%- 2%. Is it mainly because of mix or what is driving weaker realization?
In the, you are right. I think the journey has just begun when we change the year, and therefore you will see more differentiated benefits coming in the subsequent quarters. What we have done is we have questioned the price levels at INR 254 a bag compared to in December.
From our own December quarter, we are up modestly at INR 1. Compared to last year, we were at INR 255. Yes, the journey would further see improvements with higher blended cement and more premium cement sales. It has just begun.
Got it. Thank you. Second, if I look at your blended installation for next year, it would be at best 21%, 22% than your expanded capacity. At those, probably you will not need additional capacity in FY 2028 as well. Does that have you driving a more deliberate CapEx approach?
I have Chirag Nambiar also to answer this question.
Yeah. I think the way we are looking at this, how we would look at capacity is two, three things. One is when we look at our performance, we know where are the places we need to improve on.
There are certain capacity which is there, which is in the wrong places. We will be adding new capacity in places which will help us in terms of reducing our cost, logistics cost especially, as well as help us improve our penetration into those markets. I am talking specifically into the markets where we have high market share and high recall value. Those are the places that we would definitely look at expanding our capacity over there.
The second thing is, we would be looking at as we are expanding our capacity, correspondingly dew capacity will also increase. This year, apart from Rajasthan and Maharashtra, as you know that we have one limestone block in Assam. This is a completely new territory for us.
That is one new area which we will start in maybe end of this year. The second new area that we will be starting is in Mundra, which is again, completely new greenfield line. These are the two new projects apart from the new dews that will help us in terms of reducing our cost.
Martin, I cover that as well, sir. One last one, if I may. In light of this, how would we see any inorganic opportunity that comes up? Would you be interested or your focus is squarely on organics right now?
Inorganically, we keep evaluating, but our focus right now is on organic development and greenfield expansion. That is our number one priority.
Sure. Thanks a lot.
Thank you. Ladies and gentlemen, in order to ensure that management is able to answer queries from all participants, kindly restrict your questions to one at a time. We shall give you time for follow-up questions. We will take the first question from the line of Jashandeep Singh Chadha from Nomura. Please go ahead.
Hello. Thank you for the opportunity. My first question is regarding the cost structure, especially in the fourth quarter also we saw that the fixed cost, which is employee, other cost, has increased significantly year-over-year and versus when we compare it to your peers also. I just wanted to understand why you say there were some vegetation conflicts that affected the cost.
However, the conflict started towards the end of February, and the vegetation cost was also in the mid of March, which impacted the industry. I want to understand why among all your Ambuja Cements is seeing such an increase in the cost success.
Secondly, in your presentation, you have also mentioned that the fleet cost was high because of some plant shutdowns. If I am not wrong, in the third quarter also you took plant shutdowns. Normally the industry takes shutdowns in the second quarter.
But in Q3 and quarter four, where the volume growth was really strong, the management decided to take plant shutdowns, which resulted in higher cost. I just want to understand what is the rationale behind taking plant shutdowns in volume-filled quarters and why Ambuja Cements' fixed cost is increasing way higher than its peers? These are my two questions regarding this.
Jashandeep, I think, when Raashi asked this, and we have tried to explain. In terms of working out on our cost at INR 5,500, which I mentioned, and from here you will see improvements. Your question is in terms of to the computation, why? Now, two components which are relevant to my business.
I mentioned about higher focus now on the spending at cement to promote the trade sales and premium cement. Second is in terms of higher replacement maintenance cost. You are right that finally one should do it during the off seasons like monsoons.
Not all the machines can be done during that period. There have been few breakdowns also of the acquired assets of Cemma and all. Under the planning and also under the off of planning, we will do it. Therefore, there have been those additional expenses of replacement maintenance.
Then in terms of the pack cost, which although, came it in the last week of February to the overall the full month of March. When you promote and sell more premium cement, there are also some additional costs of logistics and handling which also kick in to increase your cost. I also mentioned to you the journey which we want to achieve in terms of improved heat consumption.
It is still not coming in the range, and therefore we still have a higher heat consumption and I would say also specific calorific minimum which we have to improve. Again, I will attribute to some of the acquired assets. Actually, when I look at the EBITDA of Ambuja and ACC minus of the acquired assets, the EBITDA is actually higher by INR 70-80.
It would be almost like INR 800, and actually more when I normalize it is at least INR 800. I would say that the acquired assets still are not basically coming in the range to our desired levels. For which I mentioned that the first priority is stabilize the overall operations, achieve a good level of performance improvement.
Hence, in the, I think maybe couple of months, we had took the entire investor community to Sanghi plant just to showcase that how Sanghi is now in state of readiness and give higher improved volume improvement, which I think we did in somewhere like-
In March.
March itself, right? March itself. So that is like, for example, we want to showcase that, yes, some of the assets were shipped in time, but now they are in the state of readiness. Soon I will take all of you to Penna assets also. Before that, we took you to Marwar. So the journey is known, the issues are known.
Therefore, in my opening remarks also, I mentioned about certain disappointments to us also where we think that the cost per ton is on a higher side, and we are basically in a position to bring it down in coming quarters. Therefore, you will see this is picked out, and you will see an improvement progressively from here.
Thank you for the detailed answer, sir. My next question is largely taking forward Navin's question only. First of all, Ambuja is the only company which has given such a bearish scenario for FY 2027, and I understand the rationale that you have given behind it. But with significant industry growth and Ambuja expecting an 8% growth, there are certain capacities which are coming.
I just wanted to understand that what is your target utilization from the assets of Sanghi, Orient, and Penna for FY 2027? And I understand there are some challenges. So will there be additional CapEx required to bring the acquired assets to Ambuja's set of standards? If you could please elaborate on this.
Thank you, Jashandeep. So Orient, for example, is operating at full capacity. So far as Sanghi is concerned, I will peg myself at almost 65%-70%. And so far as Penna is concerned, I will consider around 55%-60% in terms of utilization factors. And the existing assets of Ambuja and ACC, I would peg it through closer to around 75%-80%.
So on an overall basis at the Ambuja Cements level average, in the scenario which I have mentioned to you, I would say 70%-72% ballpark utilization. You are right. We anticipate this extra demand, and therefore we would go with this belief. But if for any surprises positive in the industry, and which we would all wish to, this number will definitely look positive. But as of now, situation is tougher.
And sir any further CapEx for bringing these assets to Ambuja standard?
As mentioned by the overall disciplined approach of CapEx, we want to now set up in the high potential market, which we have now supposedly done a marketing where we have market leadership.
He has already indicated few of the assets in his narrative. Progressively now, for example, let me first commission the existing assets in hand, which are ongoing, basically the 10 million, and briefing to you all with stabilization and achievement of this by this content. I think quarters then we will also highlight to you the CapEx program as it comes up.
Sure. Thank you so much, Vinod sir.
Mundra is very much now in the pipeline and so are a few others which he mentioned.
Thank you so much.
Next question from the line of Manish Somaiya from Cantor. Please go ahead.
Good evening and thank you for taking my questions. I just wanted to ask, we have talked a little bit about FY 2027 and outlook. What I'm trying to reconcile is how should we reconcile between the improvements that you're planning in FY 2027? How much of that is dependent on internal execution versus external normalization? Maybe if you can just help us understand that.
I would say, Manish, thank you. A very good question. I would say that the external factors will affect most of the industry players. Therefore, I will give more weightages on the internal factors and the execution of the same. It will bring the overall differentiation and leadership leverage on that. I would keep it in this manner.
Manish, if I may, this current year, I think if you look at our performance, we realized where the gaps are, and that's exactly where we are hyper-focused on and improving on those performance. Based on whatever guidance we are giving, this is 100%, which is controllable by us.
If we're not able to achieve the guidance, it's purely because of our internal execution and not any other factor. That's where the whole team is really focused on and delivering on the numbers now that we are talking about. We're very confident that this year we will be able to hit the numbers which we are talking about.
Thank you. My second follow-up is on the premium products. Now they constitute about 35%-36% of trade. What should be the realistic target that we should have in our models as we go out to FY 2027 and maybe even beyond? What is the upside to that 35%-36%?
Manish, right now, for example, I would just say that this is a good number for us to attain and therefore, that is what, for example, can be considered in terms of the share of premium cement as percentage of trade sales.
Okay. Wonderful. Thank you so much for your time. Appreciate it.
Thank you.
Thank you. To request participants, please limit to one question at a time. The next question from the line of Prateek Kumar from Jefferies. Please go ahead.
Yeah. Good evening. My question is on cost again. In the last heard quarter on call, which happened around start of February, management talked about cost of INR 4,000. We are still talking about INR 4,700. INR 4,000 in January. We are talking about INR 4,700 in exit of this quarter. How is this costing?
What is the cost of INR 4,700, I am unable to understand. The question is on the balance sheet. Your ACC is second quarter to the negative, actually negative for the year. Your overall consolidated Ambuja's cash flows also negatively impacting the negative working capital. Can you throw some light on this, please?
Thanks, Prateek. I will take the second question first. In terms of the ACC Ambuja, if you see, ACC has receivable from Ambuja under the MSA. You also would be aware that we have taken shareholder approval in terms of the Inter-Corporate Borrowing, wherein these receivables will get paid off.
You will find in the coming quarter, this will get knocked off with the ICD number one. It is like as a one uncontrolled business under the MSAs receivables are there. This is giving some negative operating cash flow.
So far as Ambuja is concerned, I think you would have seen we have a good level of inventory, which is higher. When it comes to receivables, these are under good control with the high degree of trade sales.
Therefore, on an overall working capital of Ambuja, you will see only increment for the March quarter compared to December quarter. Your question about the cost. Prateek, I think what we had envisaged to what is the reality. Yes, there are differences because of the overall quarter effect situations.
Many times those anticipations, for example, have not worked upon, and then suddenly the packing bag situations which have come up. It also, for example, when Prateek mentioned about 10% growth, we also lost a good level of volume because of the packing bag issues and all.
There are these situations which will have to be dealt with. But luckily now at least we know that this is the peak level of cost which we have hit. From here, for example, as Karan also mentioned, the numbers will be tapering down with every passing quarter.
Reasons I have already explained, right from landing to repairs and maintenance to the higher cost, the higher leads, for example, the AGTs or, for example, when it comes to India, the lower government initiatives which we are now. Also, for example, we have a lower government incentive, A, because of the GST rate which has come down.
B, we also exhausted some of the plants which were giving or having the incentives. And third, some of the states we are now accruing incentive on virtual visibility basis, basically so that we do not want to have spending the long-term approvals and all. There are a combination of these accounting strategies and the situation of some of the plants which have not matured to what we thought, most of our quarter sales.
Sure. Vinod, any clarification and you?
Go ahead, please.
One clarification. In the opening remarks, you said that you had INR 700 of cost. Is it just a day cost or a monthly cost or a last month? What is that cost?
We had basically hit INR 700 for the month of March peak. But then let's say that except those de-accelerations that were, for example, almost INR 750, which affected us. On a normalized basis, I was saying INR 700 for the month of March.
Okay.
Thank you. Next question is from the line of Amit Singhania from Kotak India AMC. Please go ahead.
Yeah. Hi, gentlemen. Thanks for taking my question. My question is also following up on the cost front. We could see on the first week of February when you had last control, and if I may quote, the average cost for the quarter was INR 4,600, along with one-off. Whereas you had exited December quarter well below INR 4,000 cost.
That was apparently on the first week of February. I understand we do carry a good amount of inventory as well. We see some margin from that. Some more stock raw material and input on that as well. Furthermore, we had a one-off in the Q3. We have increased or enhanced our TV contribution in this quarter. Pricing was slightly better than the previous quarter seasonally, which is logically contribute to a better profitability.
Despite everything and also the previous answer that March month was INR 700, which is a cost. So I need to understand how to add one third of the entire cost of the quarter on the light of the recent commentary of customer or FMCG which was given on February with the inventory, which will be delivered in March-April, along with your commentary currently on the March with the INR 700 average cost.
Also the increase which we have been seeing mostly are external factors which could impact every player and most of the players in this industry. So for whatever results we have seen from the large size of the industry, it seems like not creating too much opportunity to create in this quarter or in future.
So just wanted to understand how should we reconcile your stock of inventory along with the exact number which is happening this quarter, along with the peers who have reported numbers. Then how should we look at it in our outlook on that? That's my question. Thank you very much.
Okay. Thank you. I think, see, lately when in December, for example, we have been very upbeat in terms of some of the turnarounds which you will see in some of our acquired assets like Penna, for example, more so its factory. As you know, Penna is geographically more in South India.
If you actually look at the numbers and Penna, for example, has been one of the most affected geography for the March quarter. Therefore, we have taken some of the machines on shutdown, and basically there have been a couple of shutdowns also.
Therefore, which has increased my higher repairs and maintenance for the quarter of March, number one. Number two, in terms of some of the acceleration which we have to give to our sales and branding and advertisement is what we have given.
Results of the same we will get actually as an investment on our supply chain. This will more be accounted as an operating cost. That is where, for example, the branding and advertisement costs are higher. Then, of course, for the month of March, there have been these abnormal costs for CPA, for example, and we have also seen a higher fuel cost and higher fuel consumption also.
For example, at the moment, if you don't have a right blend of fuel, the heat consumption is also higher. So those also, for example, technically the CPAs have got affected. That was when we also in December, our quarter was at INR 7,500 of cost for the quarter, INR 7,600. March also, for example, we are almost at INR 7,500.
If you look it in this manner that certain plant movements for March could not justify or we could not also fulfill, therefore we have basically been at the same levels as what we were in December quarter.
I understand the part of 3,500 versus 4,500. I am just trying to reconcile the commentary with quarter of 4,000 exit in December with the current commentary of 4,100 for the month of March. Just because there is one month in February, I am just trying to understand the entire thought process because of that, when we know that inventory gets carried on couple of months, which is there.
I will appreciate if you can share us a composition of various raw material cost along with the transportation cost with cement from exit of INR 4,000 now exit in March. May not be now, but later on, also you can release that.
No, I did not change the commentary. I think, again, even if you remember the last call, I had always said that the exact month of March. While you are considering the whole March quarter of 2026, no, that was not there. The commentary was more about our aspiration and our plan to get closer to 4,000 by month of March.
Now, basically. Therefore, while the average would still be higher and not at 4,000. Therefore, please do not mistaken with 4,000 as average of the March quarter. Number one. Number two, of course, like I was highlighting that month of March, for example, barring this aberration of the West Asia crisis, and you might say that we would have got a little bit affected more compared to Delhi as compared to others could be. But yes, we got affected with the overall impact and all.
Therefore, the pressure of volumes and therefore the pressure on sales and the higher advertisement, branding or sales promotions have been there. Therefore, we unfortunately could not come below 3,500 for this entire quarter of March 2026.
Thank you.
Yeah.
May I request you to unmute quickly?
Sure, I'll do that.
Okay. Next question on the line from [analyst from Goldman sachs]
Sir, thank you for taking my questions. I have a couple of them. One is, sir, for Sanghi plant's optimization, how important is for the Nalia railway line to be ready? And how far do you see Nalia being connected and ramped up in volumes at Sanghi? That's question number one, sir.
Pulkit, our base model is not linked to Nalia railway line. It is more with the overall our marine infra, for example, and therefore, as you would know that we have already ordered seven vessels which will be delivered in a progressive manner starting from this year.
That is what, for example, Sanghi will bring the strength. Then otherwise, we are counting on the road movement from Sanghi. The railway line only will be an add-on, but not being considered in the base model.
Sure. The plan is to ramp up even if Nalia takes a little longer to be ready. Is that the right way to look at it?
Yes. Right now, although in Sanghi we don't have a ramp up per se of capacity. But yes, ramp up of the existing capacity, the utilization part.
Absolutely, sir. My second question is it fair to assume as and when there is a final resolution on the Jaiprakash Associates assets, that those assets will come to us? Is there a possibility, even since we already have our own organic growth plan, there are a lot of works to do on increasing capacity utilization. We could also not be considering having those assets. How should we look at it?
Pulkit, I will still consider that for Jaiprakash Associates, the RP is another different company, and therefore, it would be inappropriate for us to enter anything on that. As things progress, whatever development happens, we will keep you know.
Thank you. Next question from the line of [Analyst name not clear] Please go ahead.
Thank you. I have two questions. My first question is, Ambuja Cements has completed repetitive earnings and the EBITDA margin is the lowest with high cost inflation, do you see the industry raising cement prices in the next few months to pass on the full cost inflation? Or can we expect further margin deterioration with the inability to raise cement prices?
I would say that given the scenario of demand will be very important to basically see the price being passed on to the customers. 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 bit little subdued and soft. Therefore, for example, when you attempt for, say, mix, I would be happy even if the industry gets half of the same.
That is like, for example, right now the situation is. Yes, cost on the other side has gone up by at least INR 25. That is like the only way then to resolve and achieve the margin is to focus on our cost of production. That is therefore I was highlighting the internal sector will be more important what Manish had asked. The internal sector will be more important compared to the external factor.
The second question is, Ambuja Cements' cost delivery has been all over the place over the last few quarters, can you give us some guidance where you move away from cost EBITDA % year-on-year for 2023?
Given where the EBITDA % is today and over the next two years, where do you see the EBITDA % reach, and what is the underlying cost of those margins? What kind of price increases, what kind of cost savings, what kind of turnaround do you want to see or do you expect in the next two years?
I think it will be a herculean task for any industry person to give any estimate of EBITDA percent at this stage. I would rather still continue my effort on cost. For example, one thing is like INR 500 a ton. Let us say it peaks out and then it starts coming down from here. To what journey we will go, I think progressively we will keep you posted, especially in just two quarters as things look some more better and clearer.
As of right now, cost remains the chief focus area. Obviously, when you focus on freight sales and when you focus on premium cement, this will keep giving you more mitigation. I think any guidance on EBITDA will be difficult at this stage.
Let me just add to the cost. We are looking at roughly INR 250 a ton reduction this year and then another reduction of INR 250 next year as well. That is the minimum reduction that we are looking at.
Thank you very much.
Thank you. Participants are requested to restrict to one question at a time, please. Next question is from the line of Rahul Gupta from Morgan Stanley. Please go ahead.
Hi. Thank you for taking my question. My first question is, you have talked about cumulatively INR 500 per ton of cost improvement over the next couple of years. Are we shying away from the earlier target of INR 600 that you had shared earlier? This is question number one.
We are not shying away from our target. I think as we told earlier also, we need to focus on our execution. There are multiple steps on the cost that we need to take between manufacturing, between raw material and between logistics. We are confident that we will be able to achieve that number.
I think it's just we are giving you realistic in terms of where we will be able to achieve in next two years' time. That does not mean that we don't have the runway to complete the earlier target that we have had.
We know what are the steps we need to take. We know where we need to improve in terms of our efficiency, and that's where we are focused on. This is something INR 500 is what we can commit right now for the next two years.
Got it. I have one more clarification that I want, Karan, is you talked about shifting away from capital expenditure to maintenance CapEx. Just a clarification, is that completely being guided for 15 million ton of additional linking capacity across plants? Does that mean or where do you stand on that as well?
Those still continues. I think it's just timing which will decide based on where we get the maximum return on the investment.
Got it. Thank you. One final question. I remember in second quarter and third quarter, the company was already accelerating your branding and advertisement cost. If you can help us understand what is the overall branding and advertisement cost for full fiscal 2026?
For the full fiscal year 2026, we are closer to almost like INR 700 a ton. INR 70 a ton. Yes, INR 70 a ton on the full year basis of 2026.
Thank you. Next question is from the line of Jitesh Shah from Investor. Please go ahead.
Yes. Hi, thanks. One question for Karan , one for Vinod . Karan , one question. What prompted us for a reset right now? If you could highlight five key monitorables which probably are discussed for next one year, and how does SLA fit in overall scheme of things after the reset?
Can you repeat the question? I couldn't hear you properly.
The first question is, what prompted us for a reset right now? Second, what are the five key monitorables that you have laid out for yourself? And third, how does SLA fit in overall scheme of things after reset?
I think why the reset, I mean, it's quite evident our performance has not been great. We've not been able to deliver what we have promised to our shareholders, and that is number one. I think if we have to assess ourself, we really need to improve on our costs.
That is number one. I think the key KPIs that we are pushing for ourself is we need to. I would say five things that we need to focus on. One is Elkon plants delivering to the market. The discipline on Elkon plants delivering to the respective markets. Second discipline is on
On trade versus non-trade sales. Number three is on our raw material consumption, reducing our cost on raw material as well as on the electricity front, energy consumption. And number four is improving our, I would say, channel network in terms of to help us increase our sales. I think these are the four things, but predominantly, I would say 80% of it is to do with the cost.
And we really need to get our act in order in terms of to make sure that we are able to reduce our cost. And that is what we are looking at. And till the time we are not able to deliver on what we are promising, I don't think so it makes sense to make more capital investment because you don't get the returns on those capital invested as well.
Thank you.
You had a second question?
Yeah. On SLA. On those agreements, I think you have answered the part on O&M.
Yeah. SLA-based contracts, this is something that is part of these initiatives because we do believe that what we need our teams to focus on and where do they need to put their energy on. We do believe that there is, at least in India now, there are enough competent partners out there who can run the plants at the efficiency level that we would aspire to.
That's how we are looking at. Second, obviously, given the history of Ambuja in ACC, I think the SLA partners help us in terms of cleaning up all the past union issues and all of that. From that perspective, it really helps us in terms of reducing our cost and improving our efficiency.
Thank you.
Thank you so much.
Next question is from the line of Ashish Jain from Macquarie. Please go ahead.
Hi, good evening. Sir, it is great to see explicit action taken. In that context, I just want to understand this INR 65 billion-INR 70 billion of CapEx for the next 2 years that you are talking about. Can you break it down ballpark in terms of growth versus cost efficiency versus any other initiatives that includes?
Yeah. So roughly INR 4 billion is already the CapEx, which is already under execution, and it is implementation of that. Which includes capacity, which includes WHRS, which includes your fly ash transportation system that we need. And the balance is, let's say, debottlenecking plus maintenance expenses.
Yeah. So that's it, basically. I hope I answered your question.
Ashish?
Yeah.
Thank you. Next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Hi. Thanks for the opportunity. I just wanted to understand more from a strategic perspective. When Adani had acquired these cement assets, there was public struggle between the kind of industry leader and asset. In that context, current guidance seems to be quite subdued. Is it fair to say that there is a reset in ambition from the earlier thought? Is that there as a part of the equation?
Sir, to 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 timeline. That is to do with we know that we are not delivering in terms of what we had committed.
It definitely makes sense to step back, to look back, and to see where we are going wrong and to course correct, and that's where we are. That's why we are giving you the new guidance in terms of what is the revised capacity enhancement that we are looking at and the time frame that's mentioned.
Sure. Thank you. Is there a target IRR in mind when you were doing your CapEx planning?
The project IRR has to be interesting to your board. This is all equity money. You have to look at equity return like anybody else.
Sure. Thanks a lot.
Thank you. Next question is from the line of Rajesh Ravi from HDFC Securities. Please go ahead.
Hi, good evening. Am I audible?
Yes, Rajesh, please go ahead.
Thanks for the opportunity. Actually, I was happy to know that the management focus is more rated on CapEx and also focused on cost efficiency. My only question while you are being guided on the guidance, when you say INR 250 per ton reduction , you are looking for a 27 over FY 2026.
At the same time, from three grade to we are seeing around INR 250 to INR 300 cost inflation because of the packaging and fuel price increase. Is this INR 250 net of or net-net we would see INR 300 of increase and just pass it again. At the current level, we would still see our cost going up by INR 250 in Q1 or in FY 2027?
Rajesh, thank you. What we would put it is 500 is peak and this 250 reduction is from here. We can then keep it to 4,250 as a target for 2027.
This is factoring in the cost inflation that we have already initiated?
Yes.
Year-on-year.
Correct sir.
Okay. So in Q1 also you are looking at similar cost structure?
In Q1
Before versus Q1, what sort of cost you are looking at with respect to current cost inflation and your cost savings?
Right now, for example, the headwind still continues and therefore it could be flattish for Q1 and as things comes out better that it will start declining.
Sir, flattish means current cost, which is some of which cost inflation is passed in Q1, the energy and the packaging.
Almost like INR 4,500 I would credit for Q1 and then from there, we will have the reduction journey continue. For the year, therefore, we are targeting to have a reduction of INR 250.
Right. On the non-core working capital, your core working capital has come down year-on-year from 60 days to 50 days. If I look at your non-core working capital, extra cash, that seems to have gone up significantly. Is there any strategic reason from what days it has now gone up to 60, 90 days? That is where your total non-cash working capital seems to have significantly from 300 goes to 6,500.
Rajesh, therefore like example, some of the points which I mentioned that on certain incentives and all, now we will be looking to book it on an actual basis when skewed than the actual basis, for example. So that this non-core working capital or operating working capital can be controlled. Second is, I think some of these are which you are referring to could be purely accounting working capital. Maybe separately we can segregate. But generally, the core working capital, as we also mentioned, has come down and that efficiency of working capital will continue. Which specific non-core you are referring to, for example, you can share to me offline and I will address.
Sure. Two clean coal plants which you have just mentioned. Two clean coal plants which you are looking forward to. One was Mundra, not clean coal project. What was the other beyond what is sharing currently right now?
The one which I mentioned was, one was, so in our 2023, for example, the 4 million. Just to connect to what Raashi asked me the first question, so my target for 2023 is 69, and this 4 million ton will have one at Jodhpur, 2 million and 2 million at Marathwada.
That will go to like 73. Now on top of it, the upcoming Mundra will be another 2 million of clean coal. That will be over and above this 4 million which I mentioned. Then the Assam one which will be another 2 million. That will be pair of additional new assets.
Do you have to reduce it to 2, 3 years from now?
Let's say 24- 28 months is what we are targeting.
Great. That's all from my side. Thank you all of you.
Thank you.
Thank you. Next question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Yeah. Thank you. Sir, just to clarify this INR 250 cost reduction, this is on a full year average FY 2027 which we are seeing?
Yeah. Thanks, Shravan. This is the full year FY 2027 as an average. Therefore, for example, when I said that June quarter will be flat from the March quarter, then the degree of acceleration will have to be more for the rest three quarters. You are right, INR 250 will be average for the year.
Got it. Second, when you mentioned about the prices, was it ton to face INR 120 hike that you mentioned this was for the FY year budget only or this is for March? Currently on an average, for the exit of March, have the prices for us have increased by 10% or 15% what we are forecasting?
Yes. Specifically, I was hinting on that only. FY over March as a trend for the hike cost.
Okay. Lastly, for full year FY 2026 RMX EBITDA, I think you mentioned INR 102 crore. For full year FY 2026, what could be the number?
Just a sec. I have to just read on this number. So full year RMX EBITDA you are asking, right?
Yes, sir.
Okay. Around 300. So full year RMX EBITDA is a number of unit we are looking for the FY 2026.
For FY 2027, hope we will be achieving our cost reduction projects and maybe
Revisiting and upgrading our ordinary cement. Thank you.
Yes, thank you very much.
Thank you. Next question is from the line of Raghav Maheshwari, Equirus Securities. Please go ahead.
Yeah. Hi, good afternoon. Sir, just one question from the CapEx side. Our CapEx is continuously getting delayed as Adani Cement. We are known for a proof CapEx in the very past cement, and we are continuously getting delayed at the especially like Marathwada.
We have already delayed our earlier plant also got delayed for this particular one. What is the issue behind the delay? And continuously we are getting some breakdowns different plant. Is it the maintenance related issue or what we are seeing currently right now?
You are right. Your observation is right that our CapEx has not been up to the mark. That is one of the reasons why we are pausing and correcting ourself. 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 to what our standards are is two, three things. I think one is we did not choose the right contractor for execution. Number two is we started these projects when we acquired Ambuja and ACC, that time there was no team. It took time to build up that team as well. We are confident that at least now we will be able to complete these projects in the timeline that we have given.
Number three is a lot of these projects were started without full engineering being done in place. We are using this six months to complete all our engineering for the new projects before thinking of starting. Once that is in place, then we will be looking at starting projects.
That is where you are right. That is the correct observation that we have not been able to build up projects in the stipulated time. Number two, I think the breakdown, I would say it is predominantly in the acquisition assets where we have seen major breakdowns happening, especially Penna and Sanghi. That is where the problem area has been for us, and that is where the team is focused on in terms of improving the reliability of the plants.
That is one of the reasons why we are seeing a higher R&M cost in this year, partially because a lot of repairs and maintenance which was supposed to be done was not done, and which is why one of the reasons for this breakdown as well.
That is fine.
Thank you. Raghav, I request you to join back, please. We have other participants waiting for you, sir. Next question is from the line of Harsh Mittal from Emkay Global. Please go ahead.
Yeah, good evening. This is [Harsh]. Thank you. My first question is, in your focus being focused on premiumization, what is current average gap between Ambuja Cements versus the nearest competitor currently and what is the target to narrow it? That's my first question.
You are referring to premium cement, and I can highlight that the gap between my base products and the premium cement product is closer to, let us say, INR 60-INR 65 for the super premium and INR 20-INR 25 for the premium one. I think that was like first. Then second, your question is about the gap between our price and compared to that competition.
I think, see, everyone looks at his price better than others, and therefore, every time when the industry people try and compare us, there is always different opinions. I would say that the familiar players like us and basically the other player number one, etcetera, I think the prices are more or less in the similar range in to what it takes, a couple rupees here and there. Either they are higher or we are lower or whatever reverse way. That's how the trend has been.
That is also reflected in the overall profitability of the quarter, which is close to each other for the number one and number two.
Sure. Thank you.
Thank you. Harsh, I request you to join back, please, as we have participants waiting for you, sir. Thank you. Next question is from the line of Mr. Satyadeep Jain from Ambit Capital. Please go ahead.
Hi. Thank you. This question is for Karan. I just want to understand the comment you made about recalibrating capacity. Earlier, the capacities were all in the right location. Now the capacity is looking at different location. So where were you initially looking at capacity? I believe Sanghi was also part of expansion issue. Could you just discuss where is this recalibration coming from in terms of capacity?
No, so the recalibration is coming basically, especially where we have the integrated units, those are the locations where we are recalibrating because we find that the grinding units, the operating cost, the logistics cost.
One of the reasons for the logistics cost being so high compared to competition is because the distance traveled by the integrated units is quite higher than what it should be. So one of the things that we are working towards is shifting down the grinding units in a lot of these cases and moving them closer to the market. So that is the recalibration we are looking at. I do not think that we are looking at recalibration of, let us say, clinker units. The second is, Sanghi is predominantly a hinterland cement.
We are moving towards, in the next years, you will see Sanghi moving predominantly into hinterland, and you will see new capacities coming up on the coastal region of Kerala. Adani's Line Two is one of the classic examples of that, where we would look at Sanghi supplying clinker and cement being supplied from these two. Some of this recalibration is happening. Majority of the recalibration is happening in the North, Uttarakhand and Bihar region, and Southern Gujarat and Maharashtra.
This is not something ACC specifically, but maybe if you had more insight into it. You mentioned-
It's both ACC and Ambuja. It's ACC and Ambuja, both of them had issues. I will give you example that today we supply our Bihar market through Chhattisgarh, and though we get the business, but it is not the optimal movement of the cement that we are seeing. That is where we are looking at, we need to set up grinding units in Bihar to serve the Bihar market, and Chhattisgarh units should be just
Thank you. Ladies and gentlemen, we will take this as the last question for today. I now hand the conference over to Mr. Deepak Balwani for closing comments. Over to you, sir.
Yes. Thank you, Karan, for joining the call and sharing your insights. Thank you. All right, sir. More questions you can ask us. You have my contact number. Please feel free to call me. Thank you.
Thank you. On behalf of JM Financial Institutional Securities Limited, that concludes this conference. Thank you for joining us, and you may disconnect your lines.