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Informist, Thursday, Jul. 23, 2026

 

By Ashutosh Pati

 

MUMBAI – Ambuja Cements Ltd. is expected to take a significant hit to its bottom line for the June quarter due to a rise in costs, particularly of fuel and freight, stemming from the war in West Asia, according to analysts. The company's top line growth is seen flat on year due to a decline in volumes.

 

The Adani Group cement major is expected to post a consolidated net profit of INR 4.57 billion for the June quarter, down nearly 43% on year, according to the average of estimates from 12 brokerages. The highest estimate for the company's net profit is INR 6.92 billion from Nomura Equity Research and the lowest estimate is INR 2.80 billion from Motilal Oswal Financial Services Ltd.

 

The company's consolidated revenue for the quarter is expected to be INR 103.72 billion, flat on year, according to the average of the estimates. Estimates for the company's revenue range from a high of INR 111.50 billion from Systematix Shares and Stocks (India) Ltd. to a low of INR 96.77 billion from JM Financial Institutional Securities Pvt. Ltd. Sequentially, Ambuja Cement's net profit is expected to fall over 76%, and revenue is projected to decline 5%.

 

"The West Asia turmoil has driven up coal/pet coke consumption prices in Q1FY27E and these are expected to peak in Q2FY27E, in our view," HDFC Securities Ltd. said in its earnings preview report for the sector. "We expect the recent surge and then a cool-off in PVC resin prices globally to result in cement industry's packaging cost peaking by Q1FY27. Logistics costs for the industry will go up as well in Q1, factoring in the recent increase in diesel prices," the brokerage said.

 

Nomura expects Ambuja Cement's raw material and power and fuel costs to rise 9% on year and freight costs to rise 2%. The company's fixed costs are seen increasing 11% on year while operating costs could go up 7% on year, Nomura said. Similarly, Kotak Securities Ltd. expects Ambuja Cement's costs per tonne to increase over 8% on year, led by higher packaging and freight costs.

 

Most brokerages see the cement major's volumes falling on year in the June quarter, while some see flattish growth. Ambuja Cement's volumes are likely to fall 2-7% on year for the quarter, as per five brokerages. "We expect the company to underperform industry volume growth, as management prioritises margin optimisation," Elara Securities said.

 

The company's consolidated volumes are projected to fall around 2% on year to 18.5 million tonnes due to calibration of approach with an aim to increase profitability, according to Prabhudas Lilladher Pvt. Ltd. Kotak Securities sees Ambuja Cement's volumes for the quarter at 18.8 million tonnes, flat on year.

 

Ambuja Cements is expected to report earnings before interest, tax, depreciation, and amortisation of INR 15.46 billion for the June quarter, down over 21% on year but up nearly 6% sequentially, as per the average of estimates. The highest estimate for the company's EBITDA is INR 17.13 billion from Nirmal Bang Equities Pvt. Ltd., while the lowest estimate is INR 13.37 billion from Nomura.

 

The company's EBITDA per tonne is seen falling 18-28% on year to INR 765-INR 867 per tonne, as per five brokerages. However, this is expected to rise 13-19% sequentially. Ambuja Cements' realisation is expected to improve 3% quarter-on-quarter, led by an increase in cement prices across regions, Prabhudas Lilladher said.

 

In the post-March quarter earnings conference call in May, the company's management had said it would reduce costs by a total of INR 500 per tonne by 2027-28 (Apr-Mar). This includes cost reduction of INR 250 per tonne in FY27 and another INR 250 per tonne the following year. "...we really need to get our act in order in terms of making sure that we are able to reduce our cost," a senior company official had said. "...and until the time we are not able to deliver on what we are promising, I don't think it makes sense to make more capital investment because you don't get the returns on those capital invested as well."

 

Of the 17 brokerage reports on the company available with Informist, 12 have a 'buy' or equivalent recommendation on the stock with an average target price of INR 562. This is 28% higher than the current market price. Three brokerages have a 'hold' recommendation on the stock while two have a 'sell' recommendation.

 

On Wednesday, shares of Ambuja Cements closed 2.3% lower at INR 430.80 on the National Stock Exchange. The company had reported a net profit of INR 18.30 billion for the March quarter on revenues of INR 108.92 billion. Since its March quarter results, shares of the company have fallen marginally. The company will detail its June quarter earnings on Tuesday.

 

Following are the June quarter earnings estimates for Ambuja Cements from 12 brokerages in descending order by the estimate of net profit in INR billion:

 

Brokerage firm	Net sales	Net profit	EBITDA
Nomura Equity Research	98.28	6.92	13.37
Nuvama Wealth Management Ltd	102.92	5.84	15.80
Nirmal Bang Equities Pvt Ltd	100.84	5.79	17.13
Axis Securities Ltd	109.59	5.51	16.55
PhillipCapital (India) Pvt Ltd	100.87	4.69	15.21
Systematix Shares and Stocks (India) Ltd	111.50	4.60	14.00
Bank of America global research	108.73	4.58	15.18
Kotak Securities Ltd	106.48	4.09	16.30
Prabhudas Lilladher Pvt Ltd	104.51	3.75	15.76
Elara Securities (India) Pvt Ltd	103.44	3.18	16.04
JM Financial Institutional Securities Pvt Ltd	96.77	3.09	14.85
Motilal Oswal Financial Services Ltd	100.70	2.80	15.30
Average	103.72	4.57	15.46

 

End

 

Edited by Himanshi Gupta

 

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