Competitive intensity, valuations may cap gains in Ambuja Cements

Ambuja Cements (ACEM) reported Q2FY26 numbers that beat consensus estimates.

- DEVANGSHU DATTA

The company has strong capacity addition lined up for FY26-FY28, apart from the ramp-up of acquired capacities. It will have the ability to sustain volume additions for next 3-4 financial years, and therefore, drive market share gains. The management is working to lower costs/ tonne. However, every cement major has capacity additions in progress and valuations may already be discounting gains to a large extent.

ACEM reported strong growth of 81 per cent year-on-year (Y-0-Y) in operating profit at 1,760 crore and operating profit per tonne (t) grew 52 percent Y-0-Y to%1,042. Margin was up 600 basis points (bps) at 19 per cent. Adjusted profit was up 14 percent Yo-Y at 560 crore.

Management is targeting reduction of costs from %4,200/tonne currently to %3,650/tonne by FY28 through optimised fuel mix, higher green power use, and logistics improvement. Primary lead distance was reduced by 2 km to 265 km. Costs have been reduced due to dispatch optimisation and supply chain visibility via the artificial intelligence (Al)-driven CiNOC (Cement Intelligence Network Operations Center) platform.