Ambuja Cements' first-quarter net profit fell 37% year-on-year to ₹504 crore, while cement sales volumes declined to 17.1 million tonnes, missing analyst estimates.
Higher petcoke and freight costs, partly driven by geopolitical tensions in West Asia, continued to pressure profitability.
Ambuja aims to reach 119 MTPA production capacity by the end of FY27 through new plant commissioning and is targeting a ₹250 per tonne reduction in costs to improve long-term profitability.
Ambuja Cements Shares Fall After 37% Profit Drop; West Asia Conflict Adds to Cost Pressure
Ambuja Cements reported a 37% year-on-year decline in first-quarter profit as lower cement volumes and higher fuel and freight costs squeezed margins, even as the company remained optimistic about cost reductions and capacity expansion
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Summary
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Ambuja Cements recorded a 37 per cent decline in first-quarter net profit on Tuesday. Profit after tax dropped to Rs 504 crore for the three months ended June 30. The Adani Group-owned cement maker had logged Rs 797 crore in the corresponding period last year.
Subdued sales volumes and escalating expenses tied to the Middle East conflict dragged down the earnings. Consequently, Ambuja Cements shares slipped 2 per cent to trade at Rs 421.75 apiece at 2:55 pm on July 28.
Volume Decline and Margins
Cement sales volumes for the country's No. 2 cement maker by capacity retreated to 17.1 million tonnes during the quarter. This marked a decline from 18.4 million tonnes in the previous year.
The reported figure missed the 17.9 million tonnes estimate projected by brokerage firm Centrum.
Elevated petcoke prices and mounting freight charges have compressed profit margins across the cement sector. Fierce market competition has also restricted the pricing power of producers.
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"The impact of peak fuel cost inflation is expected to coincide with the seasonally weaker Q2, potentially impacting industry profitability in the near term," Ambuja stated.
Operational Efficiency and Outlook
The company expects better operational control going forward. Vinod Bahety, CEO of Ambuja Cements Limited, highlighted this positive start to the year.
"We have started FY'27 with strong momentum, driven by our focus on value-led growth, premiumisation and disciplined execution," Bahety said. "Higher trade sales and an increased share of premium products strengthened our market mix, resulting in improved profitability and quality of earnings."
Bahety said the company delivered a sequential cost reduction of Rs 206 per tonne despite temporary expenses stemming from West Asia geopolitical tensions.
This operational efficiency resulted in a 331 basis points quarter-on-quarter expansion in the EBITDA margin, which reached 16.7 per cent.
The cement maker aims to achieve a total production capacity of 119 MTPA by the close of the 2027 financial year. It plans to commission new plants in Dahej (1.2 MTPA), Salai Banwa (2.4 MTPA), Bathinda (1.2 MTPA), Jodhpur (2 MTPA), Kalamboli (1 MTPA), and Warisaliganj (2.4 MTPA) to meet this goal.
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Ambuja is also progressing toward lowering costs by approximately Rs 250 per tonne. This will help the firm achieve a target cost of Rs 4,250 per tonne by the end of the financial year.