Synopsis: This Cement stock came into focus after profit surged over 360 percent YoY as expansion and cost control strengthened performance despite softer sequential revenue.
A leading cement stock came into focus after reporting robust year-on-year profit growth despite a sequential dip in revenue and operating profit. The stock saw renewed investor interest on the back of an improved operating margin and aggressive capacity expansion plans, signaling management confidence in long-term demand growth across infrastructure and housing sectors.
Ambuja Cements Limited opened at Rs. 567.35 and touched an intraday high of Rs. 582.70 against its previous close of Rs. 565.25, marking a 3.1 percent rise at the day’s high. The company’s market capitalisation stood at Rs. 1,43,069.14 crore.
What’s the News?
On a quarter-on-quarter basis, sales declined 10.8 percent to Rs. 9,174 crore from Rs. 10,289 crore in the previous quarter. Operating profit fell 10.2 percent to Rs. 1,761 crore from Rs. 1,961 crore, while the operating profit margin remained steady at 19 percent. Profit before tax dropped 40 percent to Rs. 838 crore from Rs. 1,396 crore. Net profit surged sharply by 126.4 percent to Rs. 2,302 crore from Rs. 1,017 crore in the previous quarter. Earnings per share rose from Rs. 3.39 to Rs. 7.14.
On a year-on-year comparison, revenue grew 21.5 percent from Rs. 7,552 crore to Rs. 9,174 crore. Operating profit increased 58.5 percent from Rs. 1,111 crore to Rs. 1,761 crore, and the operating margin expanded from 15 percent to 19 percent, reflecting better realisation and cost efficiency. Profit before tax rose 12.6 percent to Rs. 838 crore from Rs. 744 crore, while net profit jumped by 364.11 percent from Rs. 496 crore to Rs. 2,302 crore. Earnings per share improved significantly from Rs. 1.95 to Rs. 7.14.
The company remains debt free, with a net worth of Rs. 69,493 crore, maintaining its top-tier credit rating of CRISIL AAA (Stable) / CRISIL A1+. Strong cash flows continue to support its ongoing capital expenditure programme.
Comments from Management
Mr. Vinod Bahety, Whole Time Director & CEO, Ambuja Cements, said:
“Our capacity expansion is well timed to capitalize on this positive momentum. We have upped our FY28 target capacity by 15 MTPA from earlier 140 MTPA to now 155 MTPA. This increase of 15 MTPA from debottlenecking initiatives will come at a much lower capex of USD 48/MT.”
“The leadership journey has resulted in a 5% lower cost of sales YoY, and enabled our existing assets to deliver a PMT EBITDA of ~Rs. 1,189 PMT, and an overall EBITDA of Rs. 1,060 PMT.”
“Our outlook for the balance period of FY26 remains positive. We remain optimistic about delivering double digit revenue growth and four digits PMT EBITDA. Exit of FY26 we target to deliver a total cost of Rs 4,000 PMT, and further 5% reduction YoY for the next two years, helping us to achieve the cost target of Rs. 3,650 PMT by FY28.”
Operational Highlights
The company has raised its FY28 capacity target by 15 MTPA to 155 MTPA, up from 140 MTPA previously, with this incremental capacity to be achieved through debottlenecking at a much lower capex of USD 48 per tonne. Over the next 12 months, Ambuja will install 13 blenders across its plants to enhance product mix, increase premium cement share, and improve realisations. Further, optimisation of plant logistics infrastructure is expected to lift utilisation of its existing 107 MTPA capacity by 3 percent over the next two years.
Operationally, a 4 MTPA new kiln line at Bhatapara (Chhattisgarh) has started trial runs, while a 2 MTPA grinding unit at Krishnapatnam is now operational. An additional 7 MTPA capacity across three other locations is expected to go onstream in the third quarter. On the renewable energy front, the company commissioned 200 MW of solar power during the quarter, taking its total renewable capacity to 673 MW. This is projected to rise to 900 MW by the end of FY26 and reach 1,122 MW by FY27.
Outlook
Cement demand in Q2 FY26 grew around 4 percent year-on-year. With the recent GST reduction from 28 percent to 18 percent, improving business sentiment, and higher investment from both public and private sectors, demand is expected to strengthen further. The company reiterated its annual growth guidance of 7-8 percent.
About the Company
Ambuja Cements Limited, part of the Adani Group, is among the world’s top ten building materials companies. With a cement capacity of around 107 MTPA across 24 integrated plants and 22 grinding units, the company is leading India’s sustainable construction drive. It aims to achieve 1 GW of renewable energy and 376 MW of Waste Heat Recovery Systems by FY28. Ambuja has achieved 12x water positivity and 11x plastic negativity, with its net-zero targets validated by the Science Based Targets initiative (SBTi). It operates a captive port network with ten terminals for efficient bulk cement movement and has been recognised among ‘India’s Most Trusted Cement Brands’ by TRA Research and as an ‘Iconic Brand of India 2024’ by The Economic Times.
-Manan Gangwar
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