Ambuja Cements Limited Q1 FY27 Earnings Call Summary

Event Participants

Executives

4
Deepak Balwani (Head of IR), Karan Adani (Director), Rohit Soni (CFO), Vinod Bahety (CEO)

Analysts

23
Amit Murarka, Ashish Jain, Bharat C. Shah, Bhavin Chheda, Eshaan, Girija Ray, Indrajit Agarwal, Jyoti Gupta, Kamlesh, Kunal Shah, Manish Somaiya, Navin Sahadeo, Pinakin, Prateek Kumar, Pulkit Patni, Rahul Gupta, Raashi, Rajesh Ravi, Rajesh Toshniwal, Ritesh Shah, Satyadeep Jain, Shravan Shah, Siddharth Malhotra

Financials & KPIs

Geographic & Segment Commentary

• North: Highest EBITDA-contributing cluster; trade volumes grew 2% YoY with sharp reduction in low-margin non-trade; Bathinda expansion (1.2 MTPA) commissioned.
• Central: Strong market with higher premium cement mix and improved EBITDA margins; blended cement share increased; Salai Banwa (2.4 MTPA) trials completed.
• West: Well-balanced trade/non-trade; Mumbai and Gujarat contribute high-margin B2B volumes; grew positively in both segments; Dahej (1.2 MTPA) trials started, Kalamboli (1 MTPA) expected in Q2, Maratha clinker line set for next year.
• East: Trade volumes sustained with healthy EBITDA margins; Warisaliganj (2.4 MTPA) expected to commission in Q2.
• South: Consciously reduced ~1 MMT of low/negative EBITDA volumes; investing in channel network and trade focus; Penna Jodhpur (2 MTPA) has started trial production; Orient operates at 87% utilization; Penna requires INR 100-150 crore investment (WHRS/AFR) plus channel development for margin expansion.
• RMC: Q1 EBITDA ~INR 35 crore; segment margin fell to ~7% from 14-15% prior year, partly on raw material pricing and lease accounting items; company will share more detail separately.

Company-Specific & Strategic Commentary

• Value-over-volume repositioning: Trade mix deliberately raised from 74% to 78%, premium products at 34% of trade sales; July trade volumes already +8% YoY, giving confidence the channel strategy is working.
• Cost leadership roadmap: Q1 cost of INR 4,241/ton came down INR 206 QoQ after absorbing INR 110/ton of fuel escalation. FY27 initiatives target INR 130-150/ton savings: lead distance cut of 15 km (INR 30-35/ton), BCFC rail and fly ash logistics (INR 30/ton), green power and heat/power efficiency (~INR 50/ton), and other expense optimization (INR 10-15/ton).
• Green energy scale-up: RE capacity at 973 MW (up ~500 MW YoY), WHRS at 228 MW to rise to 376 MW; 45 crore units of power sold in Q1, but in-house consumption is the priority (50% of these units to be consumed from Q2); green power share ~48% including sales on path to 60% by FY28.
• Capacity expansion: 10.2 MTPA additions across Dahej, Salai Banwa, Bathinda, Jodhpur (Penna), Kalamboli, and Warisaliganj; capacity reaches 119 MTPA by end-FY27; 8-10 MTPA organic additions targeted annually thereafter.
• Acquired asset integration: Sanghi performing better with INR 600 crore jetty expansion planned; Orient at 87% utilization; Penna turnaround focused on channel and trade; ~3.5 MTPA of old capacity (mostly old ACC plants plus one acquired facility) temporarily suspended ~6 months for cost optimization.
• Merger and capital management: ACC, Ambuja, Orient, Penna and Sanghi consolidation progressing; ICDs from ACC/Orient to Ambuja are within shareholder-approved limits at 8% coupon and reflect MSA arrangements (Ambuja supplied ~3 MMT of cement to ACC).

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Volume guidance vs. Q1 volume decline

• Question: Ambuja is the only listed cement company to lose volumes; does the value-over-volume strategy put the ~80 MMT (8% growth) FY guidance at risk? (Navin Sahadeo, ICICI Securities)
• Answer: The trade/non-trade recalibration is deliberate and calculated; trade share improved from 74% to 78% yielding an EBITDA uplift of ~INR 206/ton. July trade volumes are already +8% YoY, and non-trade is being managed selectively in high-margin West and North markets. FY27 8% growth guidance is maintained with high confidence. (Vinod Bahety)

Green power economics and consumption shift

• Question: With 973 MW of 1,122 MW commissioned, what will the last 13% of capacity change, and is the benefit already captured via power sales? (Navin Sahadeo, ICICI Securities)
• Answer: Q1 saw 45 crore units sold (~INR 140 crore revenue); including sales, green power share is ~48%, not 34%. From Q2, ~50% of these sold units will be consumed in-house; grid connectivity for cement plants is being completed in 2-3 quarters. Consumption is always preferred over sale given grid power costs INR 7-8/unit. (Vinod Bahety)

Penna/Sanghi/Orient normalization

• Question: When will acquired assets reach normalized utilization and EBITDA, and what capex is required? (Manish Somaiya, Cantor Fitzgerald)
• Answer: Orient is already at 87% utilization with minimal investment needs. Sanghi is improving, with ~INR 600 crore planned for jetty expansion. Penna needs only INR 100-150 crore of WHRS/AFR investment; the bigger lever is channel development for trade in South. (Vinod Bahety)

Q2 cost pressure and mitigation

• Question: Given clinker and coal inventories, will Q2 see any cost increase at all? (Indrajit Agarwal, CLSA)
• Answer: Some impact will remain, but on a net basis Q2 costs will be in line with Q1 or slightly better. The INR 130-150/ton savings program (logistics, green power, clinker factor, fixed cost) provides a strong cushion against potential ~INR 700/ton geopolitical escalation. (Vinod Bahety)

ASP/realization vs. peers

• Question: Despite higher trade share, why is Ambuja's sequential ASP increase the lowest in the industry? (Indrajit Agarwal, CLSA; Rajesh Ravi, HDFC Securities)
• Answer: Accounting differences on incoterms and netting of expenditures, plus channel investments, distort the comparison. Pricing is market-driven; Ambuja's focus remains on the cost line, which is fully controllable, and NSP should align with industry over time. (Vinod Bahety)

Temporary plant suspensions

• Question: Which manufacturing operations have been shut, and for how long? (Pinakin, HSBC; Pulkit Patni, Goldman Sachs)
• Answer: ~3.5 MTPA of capacity — mostly old ACC facilities and one acquired asset — is temporarily suspended for ~6 months for optimization (efficiency, WHRS, AFR, logistics). No permanent mothballing and no impairments are expected; alternate plants are covering served markets. (Vinod Bahety)

ICDs from ACC/Orient

• Question: Why are ACC and Orient extending inter-corporate deposits to Ambuja when the company could raise debt more directly? (Ritesh Shah, Investec)
• Answer: The ICDs are within shareholder-approved limits, carry an 8% coupon, and are part of the MSA framework — Ambuja has supplied ~3 MMT of cement to ACC. Ambuja itself has zero debt and is funding capex via operating cash flows. (Vinod Bahety)

South strategy and value vs. volume

• Question: Why sacrifice non-trade volumes at only 65% utilization, and when will the ~1 MMT of cut volumes return? (Rahul Gupta, Morgan Stanley; Satyadeep Jain, Ambit Capital)
• Answer: The cut volumes were at negative or marginal EBITDA — with variable costs dominating, pushing those volumes destroys value. As cost competitiveness improves, the volumes will return, but the bigger objective is converting them into trade volumes; South channel investment will take 1-2 quarters to ramp. (Karan Adani, Vinod Bahety)

Capex and capacity roadmap beyond FY27

• Question: How should we think about FY28-29 capacity additions and the Maratha clinker delay? (Ashish Jain, Macquarie; Kunal Shah, DAM Capital)
• Answer: Capacity reaches 119 MTPA by end-FY27, with 8-10 MTPA of organic additions planned every year thereafter. Maratha clinker was deliberately pushed to Q1 FY28 to balance clinker supply with Sanghi's improving utilization — no structural issue. Mundra is expected around FY29. (Vinod Bahety)

Key Takeaway

Ambuja Cements opened FY27 with a deliberate value-over-volume quarter: revenue of INR 9,500 crore and EBITDA of INR 1,589 crore (16.7% margin, +331 bps QoQ), while total volumes fell ~7% YoY after cutting ~1 MMT of low-margin South/non-trade volumes and temporarily suspending 3.5 MTPA of old capacity. Trade mix improved to 78% (premium at 34% of trade), and net operating cost fell INR 206/ton to INR 4,241, absorbing INR 110/ton of West Asia fuel escalation. Management maintained 8% FY27 volume growth guidance, anchored by July trade volumes (+8%), 10.2 MTPA of new capacity rolling out through FY27, and INR 130-150/ton of structural savings. Targets include INR 4,250/ton costs in FY27, ~INR 4,000/ton by FY28, 119 MTPA by March 2027, and 60% green power by FY28. Watch points remain geopolitical fuel costs, South channel ramp-up, and trade pricing discipline.