AMBUJACEM - Ambuja Cements Ltd. Share Price

In the earnings call on April 29, 2025, management provided an optimistic outlook for Ambuja Cements. Key highlights include the achievement of over 100 million tons of cement capacity, making the company the ninth largest globally, considerably faster than its competitors. The management aims to reach a capacity of 118 million tons by the end of FY '26 and 140 million tons by FY '28.

Management reported a consolidated revenue of INR 9,889 crores for Q4 FY '25, reflecting an 11% year-on-year increase. The EBITDA stood at INR 1,868 crores, with a margin of approximately 19%. For FY '25, total revenue was INR 35,045 crores, and the management aims to achieve an EBITDA per ton of INR 1,500 by FY '28, from the current level of INR 915.

Major forward-looking points include ongoing capacity expansions with several grinding units anticipated to commence operations by Q1 FY '26, including Sankrail and Sindri. The focus on cost reduction remains paramount, with a target to reduce operational costs to INR 3,650 per ton by FY '28. Management also highlighted the strategic initiatives around renewable energy projects, targeting 1,000 megawatts by June 2026, with 300 megawatts already operational.

In terms of sustainability, the subsidiary ACC has established validated science-based net-zero targets. The management expressed confidence in the growth prospects driven by robust infrastructure spending, expecting overall cement demand growth of around 8% for FY '26, outpacing industry supply growth. In conclusion, the management emphasized their commitment to leveraging operational efficiencies, green energy initiatives, and technological advancements to enhance shareholder value.

Question 1: Rahul Gupta from Morgan Stanley

Question: Can you please help us understand the quantum of cost savings achieved during the year? Also, is there any change in the guided benefits of INR100 per ton in fiscal '26 and INR150 in fiscal '27?

Answer: We achieved approximately INR150 to INR175 per ton in cost savings so far. The remaining target is INR300 to INR325 per ton, which we expect to realize from FY '26 to FY '28. The guidance for savings of more than INR100 per ton in FY '26 and INR150 in FY '27 remains broadly on track.

Question 2: Amit Murarka from Axis Capital

Question: There were some land purchases under ACC for about INR680-odd crores. Could you help understand what this land is for?

Answer: The INR680 crores investment in land is primarily for setting up grinding units and acquiring coal mines in the western region of the country. This strategic acquisition aligns with our overall business growth and supply chain efficiencies.

Question 3: Navin Sahadeo from ICICI Securities

Question: Having deployed cash for recent acquisitions, can we say competitive intensity in the industry will soften, improving overall profitability?

Answer: With a stronger balance sheet and government spending on infrastructure, I believe FY '26 will outperform FY '25. Demand levers look positive, and we focus on organic growth, but we remain open to M&A opportunities if they arise at favorable conditions.

Question 4: Prateek Kumar from Jefferies Group

Question: What will be your cash position in April after the Orient Cement payout, and is there an open offer?

Answer: After acquiring a 46% stake in Orient for approximately INR5,500 crores, we expect to have around INR5,000 crores in liquid cash. We've also deposited INR2,000 crores in SEBI escrow for the open offer, with clearance expected shortly.

Question 5: Pulkit Patni from Goldman Sachs

Question: Can you share exit capacity utilization for Sanghi, Penna, and Orient?

Answer: For FY '25, Sanghi's utilization is around 40-45%, while Penna's clinker utilization is about 75-80%. Orient's utilization is between 60-75%. We anticipate improvements in all these figures in FY '26.