Ambuja Cements Q2 FY27 Earnings Call: Rs. 14,500 Cr Capex To 155 MT, Guides Higher Single-Digit H2 Growth (AMBUJACEM)

Ambuja Cements Ltd held its Q2 FY27 earnings call on October 29, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Flattish Volumes, Resilient Pricing in a Lean Monsoon Quarter

• Cement sales volume of 16.5 mn MT — Q2 FY 2026-2027 consolidated volumes were flattish YoY: trade grew +8% YoY while B2B/institutional remained negative (in Q1 FY 2026-2027 both trade and non-trade were YoY negative).
• Revenue from operations of Rs.9,197 Cr — with operating EBITDA of Rs.1,271 Cr (~14% margin; Rs.770/MT) and PAT of Rs.236 Cr in Q2 FY 2026-2027; net worth Rs.72,238 Cr and cash of Rs.1,070 Cr; the company remains debt-free with AAA (long-term) and A1+ (short-term) ratings.
• Trade-led mix improved — trade volumes +8.6% YoY, trade share up 6% to 74%; premium products at 37% of trade sales (vs 35% in Q2 FY26); blended cement share at 82% (vs 77% in Q2 FY26).
• Price sustained at Rs.255/bag — in a lean monsoon quarter, with Rs.10/bag traction already realized in the ongoing month (Q3 FY 2026-2027).
• Working capital cycle improved by 10 days — on better receivables and inventory management in Q2 FY 2026-2027; management expects this to sustain and support profitability in coming quarters.
• Low Q2 tax rate — CEO Vinod Baheti attributed it to tax shields from Penna and Sanghi arising out of the merger, one of the components making the merger EPS accretive.

H2 Growth Guidance Ahead of Industry, But Drought Clouds the Backdrop

• H2 FY 2026-2027 volume guidance of higher single digit, "if not double digit" — CEO Vinod Baheti guided company growth ahead of industry, with efforts to push above double digit, though higher single digit is the current planning basis; management committed to no loss of YoY growth from here onwards.
• Industry demand guided at ~6-7% for full FY 2026-2027 — per management's presentation; H1 FY27 industry demand grew ~8% (figure cited by analyst Rahul Gupta). Management had pegged industry growth at 5% earlier (period unspecified) and was the first to flag the expected deficit monsoon in Q1 FY 2026-2027.
• Drought declared in Maharashtra, Karnataka, Andhra Pradesh and Rajasthan — all large Ambuja markets; the CEO said repercussions will follow, possibly with a lag, passing through in Q3-Q4 FY 2026-2027, and management was told some states may moderate the construction cycle. The company has not faced the impact so far, though these are headwinds within the industry.
• Both trade and B2B expected to turn positive in Q3 and Q4 FY 2026-2027 — driving positive overall volume growth; October trade volumes were in line with expectations and management would "up its bets" on a higher degree of trade growth in Q3 and Q4 FY 2026-2027.
• Institutional business not abandoned — management deliberately sacrificed negative-EBITDA B2B volumes; declining costs are making value-focused institutional sales more viable.
• Regional spread in Q2 FY 2026-2027 — North led on EBITDA and volume growth (trade +13% YoY); Central second-highest regional EBITDA (trade +9%); West +14% trade growth with the most resilient EBITDA; East broadly flat; South +13% YoY with strong sequential recovery.

Rs.14,500 Cr Program to 155 MT, Self-Funded From Cash Flows

• Capacity roadmap reaffirmed: 149 MT by FY29 and 155 MT by FY30 — up from current 113.5 MTPA; unchanged from prior guidance of 140 MT by FY28 plus 15 MT from debottlenecking (FY30).
• Rs.14,500 Cr capex for the 30 mn ton expansion — ~Rs.7,500 Cr per year of spend; management projects the program over FY27-FY29 (plus ongoing and maintenance capex) to be completely self-sustainable from cash flows over the 3 years, with any borrowing "purely interim" and no structural debt component projected for exit FY28 or FY29.
• FY 2026-2027 capex guidance of Rs.6,500-7,000 Cr — ~35% already executed (analyst noted H1 FY27 capex of ~Rs.3,000+ Cr), balance Rs.3,000-3,500 Cr in H2 FY 2026-2027 including Varthaliganj and Amravati; the analyst framed ~Rs.7,000 Cr each for FY 2027-2028 and FY 2028-2029. The CEO separately confirmed capex cash outflow of Rs.6,000-6,500 Cr in FY27 and ~Rs.7,000-7,500 Cr for FY28-FY29.
• 14 projects to add ~30 mn tons cement and 10.3 mn tons clinker — grinding additions of 15.2 MT (west cluster), 11.6 MT (east cluster) and 2.9 MT (north cluster); new clinker of 4 MTPA at Maratha, 4 MTPA at Umrangso (Assam) and 2.25 MTPA at Mundra; ~50% of the expansion is planned in West India targeting high-EBITDA markets.
• Execution timelines guided at ~14 months for GU and ~18 months for IU — on a completion basis; equipment ordered, PMC consultant appointed. Kotak's Siddharth Mehrotra flagged that only ~10-15 MTPA was actually added over the past three years against a ~100 MTPA plan, and ~20 MTPA is bunched between March and May 2028 per the revised plan.
• 4.6 mn tons commissioned in Q2 FY 2026-2027 — across Dahej, Salai Banwa and Kalamboli; 3.2 mn tons across Bathinda and Penna Jodhpur stabilized with ramp-up expected in H2 FY27; 2.4 mn tons at Vartaliganj to be commissioned in H2 FY27; four debottlenecking projects with Loesche expected complete in the coming 4-5 months (~Q4 FY 2026-2027).
• 155 MT number could come down by ~2-3 mn tons over time — as older inefficient plants may be mothballed; detailed engineering still underway (period unspecified).

Rs.4,250/MT FY27 Target Holds Despite Fuel Inflation

• Total cost at Rs.4,410/MT in Q2 FY 2026-2027 — (~Rs.4,182/MT normalized excluding geopolitical conflict impact); management is on track for its FY27 cost target of Rs.4,250/MT, barring further escalation, and targets ~Rs.4,150/tonne by Q4 FY 2026-2027 (~Rs.250 reduction) despite fuel costs expected up at least Rs.100/tonne.
• ~Rs.160/ton cost improvement guided through H2 FY 2026-2027 — supported by higher green power consumption, BCFC infrastructure, an 18 MW WHRS coming up at Sangi in Q3 FY 2026-2027, and additional AFR usage.
• Blended fuel cost of Rs.1.87 per 1000 kcal in Q2 FY 2026-2027 — (vs Rs.1.60 in Q2 FY26 and Rs.1.66 in Q1 FY27); spot was ~Rs.2.2 at that point and current imported fuel spot stands at Rs.2.80-2.85 as of the call; imported fuel is below 40% of mix with domestic above 60%. Management expects to perform better than peers given the growing domestic fuel advantage.
• Green power share at 61% in Q2 FY 2026-2027 — counting both consumption and sales; the CEO clarified Q1 FY 2026-2027 was disclosed on a consumption-only basis (34% per the Q1 PPT; 48% also cited), attributing the difference to the change in disclosure basis. Net power cost was Rs.4.8/unit (vs Rs.6/unit in Q2 FY26 and Rs.4.3/unit in Q1 FY27).
• Trade-led realization benefit running at ~Rs.40/tonne in Q2 FY 2026-2027 — management estimates an incremental ~Rs.40/tonne in each of the next 2-3 quarters (Q3 FY 2026-2027 through Q1 FY 2027-2028), reaching ~Rs.150/tonne of benefit from trade by June (Q1 FY 2027-2028).
• Lead distance reduced from 265 km to 254 km — expected to fall further in Q3 and Q4 FY 2026-2027; almost 400 electric vehicles expected operational by March 2027 (end of FY 2026-2027); 5 plants have already moved to logistics SLA; DigiPin mapped pan-India and the Cement Intelligent Network Operating Center (CNOOC) supports order execution time gains.
• Government of India has come out with a specific incentive scheme for BCFC — management has mapped logistics savings from BCFC usage (e.g., fly ash movement from Tiroda to Kalamboli), in addition to railway policy incentives; 20 million tons of fly ash tied up with group thermal power plants under a long-term agreement.

Sanghi and Penna Turnaround Underway; Fly Ash and RE Power Add ~Rs.150 Cr

• Penna and Sanghi operating at ~50% utilization in Q2 FY 2026-2027 — management targets improved utilization in Q3 and Q4 FY 2026-2027; both Sanghi kilns are up and running, with a "very substantial improvement" in Sanghi utilization and cost efficiencies expected (timeline not specified), and the same complete-turnaround expectation for Penna. Asset-specific utilization disclosure deferred until after the complete revamp planned for Q3-Q4 FY 2026-2027.
• Fly ash revenue of ~Rs.25 Cr in Q2 FY 2026-2027 — reported within other operating revenue; RE power sale revenue was ~Rs.136 Cr (~352 million units sold); fly ash plus RE power totaled ~Rs.150 Cr, with combined EBITDA math of ~Rs.97/tonne. RMC EBITDA margin confirmed closer to 7% for Q2 FY 2026-2027.
• Ready-mix concrete volume of 1.07 mn cubic meters, +19% YoY — across ~125 plants in Q2 FY 2026-2027, with growth expected to accelerate in coming quarters.
• Merger of ACC and Orient Cement with Ambuja to proceed to NCLT — completion expected within FY 2026-2027, subject to requisite regulatory, statutory and NCLT approvals; management expects the merger to be EPS accretive. ACC's ICD carries an 8% interest rate (as of Q2 FY 2026-2027) and will be sorted with the merger.
• EBITDA-per-ton gap of 15-20% vs the first and third industry players — per analyst Indrajit Agarwal (CLSA); management projects profitability improvement primarily via cost optimization rather than price, with efficiency investments (WHRS, AFR, BCFC) expected to bridge the historical timing mismatch versus mature peers.

Value-First Growth With Structural Tailwinds and Near-Term Headwinds

• Exit capacity utilization of ~75% guided by FY27 — vs ~61-62% actual in Q2 FY 2026-2027 (~61% indicated for H1 FY 2026-2027); management cautioned that weighted-average commissioned capacity must factor in the timing of each capacity coming online.
• Rs.4,000/metric ton cost guidance for the entire combined capacity at 149 MTPA in FY28 — (FY 2027-2028); management corrected an initial reference to FY30/155 MTPA.
• Government promoting blended and green cement — management cited that "the government is promoting blended and green cement" with policies supporting projects that qualify for blended cement, and sees the opportunity to take leadership in green cement; announced projects are "mostly" eligible for state-level fiscal incentives, with a higher degree for the Northeast and UP.
• Near-term headwinds flagged — geopolitical conflicts, global uncertainty, higher energy costs, domestic coal constraints and weaker monsoon; structural demand supported by infrastructure spending, urbanization, rural housing and industrial activity.
• Market share stance: "there's a market for everyone to get the volume; we will pick up the value" — management will not cede share and will pursue it in a calibrated, value-first manner; CEO rejected the "aggressive capex" framing, describing the program as calibrated with both market share and profitability achievable.
• High-cost, low-efficiency units to be phased down — some very high-cost grinding units are already temporarily closed; surplus grinding capacity will be retained for flexibility ("we will have some surplus grinding, which is good for us"); vintage assets such as Jamul will also be recalibrated.