Analyst Concall
On track to cut cost to INR 3650/tn by FY28
This story was originally published at 19:30 IST on 29 April 2025
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Informist, Tuesday, Apr. 29, 2025
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--Ambuja Cements: Cement prices improving across regions in recent months
--Ambuja Cements: FY26 overall capex seen around INR 90 bln
--Ambuja Cements: Penna, Sanghi units contributed 1.6 mln tn in Jan-Mar
--Ambuja Cements: Capacity utilisation at Sanghi unit to improve in FY26
--Ambuja Cements:Cost, demand prospects look better for the industry in FY26
--Ambuja Cements: Focus is more organic growth but not shy of acquistions
--Ambuja Cements: Focus remains on promoting premium products
--Ambuja Cements: Share of premium cement brands at 29% Jan-Mar
--Ambuja Cements: Waste heat recovery, renewables to aid cost-cut efforts
--Ambuja Cements: Balance sheet stronger than ever, co remains debt-free
--Ambuja Cements: On track to meet aim to cut production cost by INR 500/tn
--Ambuja Cements: India's cement demand very strong on increased infra spend
--Ambuja Cements: Penna Cement plants stabilised, clinker utilisation 80%
--Ambuja Cements: See FY26 cement consumption growth at around 8%
--Ambuja Cements: Logistics costs fell 2% to INR 1,238 per tn in Jan-Mar
--Ambuja Cements: Closer to reach goal of 140 mln tn/yr capacity by FY28
--Ambuja Cements: Consol cash, cash equivalent at INR 101.25 billion
--Ambuja Cements: On track to commission 3 clinker units in Apr-Jun
--Ambuja Cements: Working to reach 118 mln tn/year capacity in FY26
--CONTEXT: Comments by Ambuja Cements' mgmt in post-earnings conference call
--Ambuja Cements: Total capacity touched 100 mln tn per year
By Narayana Krishna and Sakshi Jain
HYDERABAD/MUMBAI - Ambuja Cements Ltd., part of Adani Cement, is on track to meet the target to cut its production cost to INR 3,650 per tonne by 2027-28 (Apr-Mar), the management of the company said Tuesday. Ambuja Cement had in September 2022 announced a plan to cut production cost by INR 500 per tonne to INR 3650 by FY28. Ambuja Cement reported a production cost of INR 4,250 per tonne in Jan-Mar.
Investments in waste heat recovery and renewable energy, along with improving the efficiency at various units, including recently acquired units, will help the company to cut the costs to the targeted level, the management said. The integration of recently acquired units – Orient Cement Ltd., Sanghi Industries Ltd. and Penna Cement Industries Ltd. – is progressing well, the management said.
The capacity utilisation at Sanghi's unit will improve in FY26, while operations at Penna unit have stabilised, and clinker capacity utilisation is now at 80%, the company said. Penna and Sanghi units together contributed 1.6 million tonnes to the overall volumes in Jan-Mar.
After the series of acquisitions since 2022, Adani Cement is now focused on achieving growth organically by improving the capacity utilisation and cost optimisation, the management said. However, the group is not shying away from acquisitions if there is a right fit coming its way, the management said.
As part of its cost optimisation efforts, the company has reduced its logistics costs by 2% to INR 1,238 per tonne in Jan-Mar. The company is also working on setting up solar and waste heat recovery units across locations to cut the energy costs. Adani Cement aims to set up 1 GW of renewable energy capacity by FY28.
The company is expecting its overall capex of around INR 90 billion in FY26, out of which INR 60 billion will be spent on growth and INR 30 billion will be on improving efficiency, the management said.
The company management said it is bullish on cement demand in FY26, aided by improved spending on infrastructure by the government and the rise in consumption from the private sector. The company expects cement consumption to grow around 8% during the year.
The company said the cement prices are improving across regions, though there are fluctuations in some regions. The company said there was an increase of INR 7-10 per 50 kg cement bag during the March quarter at an all-India level. The overall demand prospects are looking better in FY26 compared to FY25, the company said.
Adani Cement is focusing on increasing the share of premium brands in the overall volumes. For Jan-Mar, premium brands accounted for 29% of the total volumes.
On the volumes front, Adani Cement is on track to achieve its 140 million tonne a year aim by FY28. While the company touched a 100 million tonne mark in FY25, it is expecting to reach 118 million tonnes in FY26, the management said. The company is on track to commission 3 units — clinker and grinding – in Apr-Jun. On a standalone basis, the cement volume of Ambuja Cements touched 65.2 million tonnes as on Mar.31.
Adani Cement reported its cash and cash equivalent reserves at 101.25 billion as on Mar. 31. The company's balance sheet is in good health, and it remains debt-free, management said.
On Tuesday, Ambuja Cements shares ended 2% lower at INR 533.95 on the National Stock Exchange.
End
Edited by Saji George Titus
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