Ambuja Cements Ltd, part of billionaire Gautam Adani-led Adani Group, announced its financial performance for the quarter ending December today, January 30, reporting a consolidated net profit of ₹367 crore, down 86% from ₹2,663 crore in the same period last year.
The sharp drop in net profit for the quarter can be attributed to a significant rise in operating expenses. Power and fuel costs, as well as freight and forwarding expenses, jumped to ₹4,970 crore from ₹4,105 crore in the same period last year.
Net profit was also impacted by a one-time charge of ₹107 crore related to the implementation of the new labor codes, its earnings’ filing showed.
Higher costs also weighed on the company’s operating performance, with EBITDA falling to ₹1,353 crore, a 21% drop from ₹1,712 crore reported in the same period last year.
The EBITDA margin contracted by 500 basis points year-on-year to 13.2%, compared with 18.2% in the corresponding quarter of last year.
On the top line, the company reported consolidated revenue from operations rising to ₹10,180 crore, up 20% year-on-year from ₹8,498 crore in Q3FY25.
In terms of volumes, the Adani Group company reported its highest-ever cement volumes of 18.9 million tons during the quarter, marking a 16.6% year-on-year increase from 16.2 million tons in the same period last year.
Mr. Vinod Bahety, Whole-Time Director & CEO of Ambuja Cements, said, “We are now working to address specific cost-related issues, particularly power costs, the share of green power, fuel efficiency, improvements in WHRS/AFR, and logistics costs. These are part of the blueprint to achieve the targeted cost of ₹3,650 per MT by March 2028.”
With the 2.4 MTPA Marwar Grinding Unit successfully operationalized, the company’s cement capacity now stands at 109 MTPA. It aims to achieve 115 MTPA by March 2026, while the Warisaliganj unit, earlier targeted for March 2026, is now expected to be operational in Q1 FY27.
“At a consolidated level, Ambuja’s cost structure worsened. At the same time, performance at the acquired assets continues to disappoint. Plants such as Orient Cement and Sanghi Cement have not delivered as expected, and even ACC’s numbers were underwhelming during the quarter.
Total costs rose about 6.5% quarter-on-quarter, driven by multiple factors. Raw material costs saw a sharp increase, while other expenses also remained elevated as the company failed to benefit from operating leverage this quarter. More importantly, despite management highlighting power, fuel and freight cost optimization initiatives over the past two years, there was little visible benefit this quarter. In fact, energy costs rose marginally on a sequential basis,” said Girija Shankar Ray, lead analyst for cements at Yes Securities.
As a result, higher costs significantly dented EBITDA during the quarter. The decline in profitability is largely attributable to this cost spike rather than any major weakness on the demand side, said Ray.
“That said, the company is now entering a different phase. Most of the major overhangs—asset acquisitions, uncertainty around ACC, and the merger-related developments—are largely behind it, with the merger expected to be completed within the next 12 months. Structurally, this should allow management to shift its focus more decisively toward cost control and operational efficiency,’ he said.
Competition in the cement industry remains intense, with large incumbents already enjoying scale advantages. While the Adani Group has deep financial resources, scaling up in cement takes time. The initial priority was capacity expansion, given that cement is a commodity business where higher volumes and market share ultimately support profitability. In this industry, profitability hinges on two key levers: volumes and cost control. Pricing power remains limited, as cement prices do not move in tandem with demand. At best, strong industry demand helps sustain prices when hikes occur, Girija added.
“Overall, the quarter’s numbers were weak due to elevated costs. However, going forward, the outlook could improve as major strategic events are now behind the company. Management is likely to focus more on improving operating leverage and efficiency. After years of underinvestment in capacity—during which peers like UltraTech, Dalmia and Shree Cement gained market share—Ambuja has now begun expanding aggressively post the Adani acquisition. With capacity additions underway, the next phase should be about scaling up operations and extracting efficiency gains from the expanded asset base,” the yes securities analyst said.
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