Ambuja Cements Ltd (AMBUJACEM) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (Motilal Oswal Financial Services): Ladies and gentlemen, good day and welcome to Ambuja Cements Limited Q2 FY '27 earnings conference call, hosted by Motilal Oswal Financial Services. As a reminder, all participants' line will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjeev Kumar Singh from Motilal Oswal Financial Services Limited. Thank you, and over to you, sir.
Sanjeev Kumar Singh (Motilal Oswal Financial Services Limited): Thank you. Good afternoon, everyone, and thank you for joining this call. Without much delay, I will hand over the call to Mr. Deepak Balwani, Head of Investor Relations. Over to you, sir.
Deepak Balwani (Ambuja Cements Ltd): Yeah. Thank you, Sanjeev. On behalf of Ambuja Cements, it is my pleasure to welcome you all to our earnings call for quarter two FY '27. Ambuja Cements is the ninth largest cement company globally and a key part of diversified Adani portfolio, the country's fastest growing portfolio of sustainable businesses. Before we begin, I would like to remind everyone that today's discussion may include certain forward-looking statements based on our current expectations and assumptions. These statements are subject to various risks and uncertainties, and actual outcomes may differ materially. At Ambuja, we remain committed to enhancing our transparency as
Deepak Balwani (Ambuja Cements Ltd): our disclosure standards and continuously raising the standards of our capital market communications in line with the global best practices. We are pleased to have with us today, Mr. Vinod Bahety, Chief Executive Officer, and Mr. Rohit Soni, Chief Financial Officer. With that, I would now like to invite Mr. Vinod Bahety to share his perspectives on the quarterly performance, key business developments, and our strategic priorities going forward.
Vinod Bahety (Ambuja Cements Ltd): Thank you, Deepak. Good evening all. Ambuja Cements delivered a resilient second quarter performance for FY '27, reflecting its focus on quality growth despite the headwinds of elevated fuel and logistics costs. Value focus has augured well as trade volume has grown 8.6% year-on-year, and trade share percentage has increased by 6% to 74%. Premium product is now at 37% of the overall trade sales compared to 35% last year. Share of blended cement has improved from 77% to 82%. At the same time, we are now advancing the next phase of our growth journey. I'm happy to share we have 14 expansion projects to add approximately 30 million tonnes of cement and 10.3 million tonnes of clinker capacity. The expansion includes new grinding capacities of 15.2 million tonnes in the West cluster, 11.6 million tonnes in the East cluster, and 2.9 million tonnes in the North cluster. In the West cluster, we are adding 2.9 million tonnes each at Mundra and Hazira in Gujarat and 2.9 million tonnes each at Raigad, Kalyan, Amravati, along with 1 million tonnes of the bulk cement terminal at Dahanu in Maharashtra. In the East cluster, we are adding capacities at Rangiya and Hojai in Assam, 2.9 million tonnes each, Godda in Jharkhand at 2.9 million tonnes, and Muzaffarpur in Bihar at equally 2.9 million tonnes. In the North cluster, we are adding 2.9 MTPA to Dadri Line 2 in Uttar Pradesh. The program also includes new clinker capacities of 4 MTPA at Maratha in Maharashtra, 4 MTPA in Umrangso in Assam, and 2.25 MTPA at Mundra, strengthening the upstream network required to support the expanded grounding grinding footprint in the most profitable high-EBITDA markets. Operating conditions remain challenging with the geopolitical conflicts, monsoon-related headwinds, higher energy costs, global uncertainty, and the constraints in domestic coal availability. Against this backdrop, we remain focused on market discipline, improved product mix, sustainable profitability, and increasing the share of profitable trade volumes. Plant shutdowns have been successfully completed for major plants. This will help to achieve volume growth ahead of the industry in H2 FY '27, supported by accelerated trade volumes and calibrated institutional sales. Our strategy remains clear: creating sustainable value ahead of the volumes. As we move into second half of FY '27, our focus is on strengthening profitability through structural cost improvements, disciplined capital allocation, and calibrated expansion. We continue to execute against the key strategic priorities. We remain focused on improving revenue quality through a stronger trade and premium mix. Trade volumes increased by 8.6% year-on-year, while trade share rose by 6% to 74%. Premium product increased by 2% to 37% of trade sales, while share of blended cement improved from 77 to 82%. Prices sustained at Rs. 255 per bag in otherwise a leaner monsoon quarter. Meanwhile, we have seen a good traction this month where we already have realized Rs. 10 per bag. Better receivables and inventory management has helped to improve the business working capital cycle by 10 days. This is expected to sustain and help to further improve profitability in the coming quarters. Across regions, North led on EBITDA and total volume growth in terms of year-on-year, with trade volumes increased 13% year-on-year.
Vinod Bahety (Ambuja Cements Ltd): Central cluster delivered the second-highest regional EBITDA alongside 9% growth in the trade volumes. West recorded 14% trade volume growth and most resilient overall EBITDA performance across the regions. East maintained trade volumes broadly in line with last year. South grew trade volumes by 13% YoY and delivered a strong sequential volume recovery. Our Ready-Mix Concrete business achieved quarterly volume of 1.07 million cubic meters, up 19% YoY, with current network of almost 125 plants. We expect the pace of growth in the Ready-Mix Concrete business to accelerate in the coming quarters. We also strengthened our market presence through differentiated brand initiatives. The Adani Ambuja Kawach, the Adani ACC Gold Water Shield Cement monsoon campaigns ran across more than 2,000 cinema screens and were supported by digital and outdoor media, reaching over 30 million consumers digitally. We continue to strengthen the structural drivers of earnings through manufacturing excellence, energy efficiency, logistics optimization, and digitalization. Green power share stood at 61%, while the net power cost was rupees 4.8 per unit compared with this rupees 6 per unit in Q2 of FY '26 and rupees 4.3 per unit in Q1 of FY '27. We expect the share of renewable power consumption to increase in the second half, further supporting in terms of lower power costs. Logistics costs were moderately higher year-on-year due to higher diesel costs, which has been partly offset by the reduction in the primary lead from 265 km to 254 km. Higher utilization of the BCFC infrastructure for the fly ash movement is expected to support further cost reduction of raw materials in the coming quarters. The fuel mix improved with a higher share of domestic coal compared with the high-cost pet coke. Fuel cost stood at rupees 1.87 per 1,000 kcal in the second quarter of FY '27. And if I compare it last year, it was 1.60 per 1,000 kcal, and if I compare with the previous quarter, it was 1.66 per 1,000 kcal. The total cost stood at rupees 4,410 per metric ton. However, if I exclude the impact of geopolitical conflicts, it comes to around 4,182 per ton on a normalized basis. With these numbers, with these measures, we are on track to achieve our FY '27 cost target of rupees 4,250 per metric ton. Volumes are expected to grow ahead of the industry in second half of FY '27, supported by accelerated trade volumes and calibrated institutional sales. Our growth remains trade-led in line with our strategy, while we continue to strengthen the institutional business through a comprehensive solutions approach focused on value and profitability. During second quarter, we commissioned 4.6 million tons of capacity across Dahej, Salai Banwa, and Kalamboli. Dahej in Gujarat, Salai Banwa in UP, and Kalamboli in Maharashtra. Another 3.2 million tons across Bhatinda in Punjab and Jodhpur, with the Penna Jodhpur in Rajasthan has stabilized and we expect it to ramp up in the second half. In addition, the 2.4 million tons capacity at Warsaliganj in Bihar will be commissioned in second half of FY '27. Alongside this capacity ramp-up and our expansion roadmap, we continue to focus on improving asset productivity and locating grinding capacity closer to the consumption centers to improve utilization and reduce the logistics intensity. Following strong shareholder support, the proposed merger of ACC and Orient Cement with Ambuja Cements will now proceed to NCLT for the final approvals. Subject to the requisite regulatory, statutory, and NCLT approvals, we expect completion of the merger within this financial year. This brings us closer to the one cement platform, which is expected to simplify the corporate structure, unlock operating synergies, and support long-term stakeholder value. In addition, to simplify the
Vinod Bahety (Ambuja Cements Ltd): structure, the proposed merger is expected to be earning per share accretive. Let me now briefly summarize our consol Q2 financial performance. The key highlight, cement sales volume of 16.5 million metric tons, revenue from operations of Rs 9,197 crores, operating EBITDA of Rs 1,271 crores, EBITDA margin of almost 14%, EBITDA per metric ton of Rs 770, PAT of Rs 236 crores, net worth of Rs 72,238 crores, cash and cash equivalents of 1,070 crores. We continue to remain debt free with highest rating of AAA long term and short term A1+, which provides enough financial strength to support our expansion program. Looking ahead, the near term conditions remains challenging amid the geopolitical conflicts, global uncertainties, and the higher energy costs with weaker monsoon as well. At the same time, structural demand remains supported by infrastructure spending, urbanization, rural housing, and industrial activities. We remain focused on premiumization, operational efficiency, network and logistics optimization, and prudent capital deployment. With standarding of business mix, a clear cost roadmap, a debt-free balance sheet, a well-defined expansion program, and continued progress towards the one cement platform, we are well positioned to deliver sustainable value-led growth. Thank you. I will now hand over the call to the moderator.
Moderator (Motilal Oswal Financial Services): Thank you very much. We will now begin with a question and answer ses- session. Anyone who wishes to ask a question may press star and one on their touchtone 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'll wait for a moment while the question queue assembles. The first question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Shravan Shah (Dolat Capital): Hi sir.
Vinod Bahety (Ambuja Cements Ltd): Yeah, hi Shravan.
Shravan Shah (Dolat Capital): Hi. Sir, couple of questions. First to to understand, so what has so what has changed that wa- now again we are we are looking at further expansion plans significantly? And there also just to get an idea to to reach correct me if I'm wrong, broadly we will be reaching close to 148, 149 million ton by FY29 from currently 113.5 MTPA. So how much capex is needed to to reach this 140 149 million ton?
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