Ambuja Cements Q2 FY26: Volume & Margin Drive Deliver a Strong Surge

Ambuja Cements Q2 FY26: Volume & Margin Drive Deliver a Strong Surge

Ambuja Cements delivered a standout quarter, with a ~20% YoY rise in volumes, healthy revenue growth and margin expansion, leading to a sharp jump in profit. Revenue hit ~₹9,174 crore (+21.5% YoY), cement sales volumes reached 16.6 million tonnes (+20% YoY) and EBITDA margin expanded to ~19.2% (+4.5 pp YoY). Consolidated PAT surged to ~₹2,302 crore (+364% YoY), helped partly by non-recurring items (tax provision reversal). The company has raised its FY28 capacity target from 140 MTPA to 155 MTPA, signalling both growth ambition and confidence in demand.

*Key Highlights*
* Volume (cement sales): 16.6 million tonnes in Q2 FY26 (+20% YoY), highest ever in Q2 series.
* Revenue from operations (consolidated): ~₹9,174 crore (+21.5% YoY)
* EBITDA: ~₹1,761 crore (+58% YoY) and EBITDA per tonne: ~₹1,060 (+32% YoY)
* EBITDA margin: ~19.2% (+4.5% points YoY)
* Consolidated PAT: ~₹2,302 crore (+364% YoY)
* EPS: ~₹7.14 (+266% YoY)
* Cost reductions: Kiln fuel cost down ~2% YoY and power cost down ~6% YoY
* Capacity expansion: FY28 target raised to 155 MTPA (from 140 MTPA) via debottlenecking (capex ~USD 48/MT)

*Revenue & Profit Analysis*
Revenue growth of ~21.5% YoY to ~₹9,174 crore reflects strong demand and good pricing. Volume growth (+20% YoY) was a major driver, complemented by improved realisation and premium product mix (premium cement share ~35% of trade sales).
Profit grew disproportionately higher (+364% YoY) to ~₹2,302 crore, but this included a tax‐provision reversal of ~₹1,697 crore which significantly boosted the bottom line.
Thus, while underlying operations are improving (volume, margin), the exceptional item means profit growth is not purely organic. EBITDA margin expansion to ~19.2% (+4.5 pp) indicates cost discipline and premiumisation working. The company has also improved cost of sales via fuel/energy initiatives (fuel & power cost reductions).

*Segment/ Operational Performance*
* Volumes & Mix: Cement sales at 16.6 million tonnes (+20% YoY), the highest ever for Q2 in the company’s history. Premium cement (higher margin product) saw faster growth (28% YoY) and its share improved.
* Cost Efficiency: Kiln fuel cost reduced ~2%, power cost reduced ~6%. Direct dispatch (which lowers logistics cost) increased by 5% points to 59%.
* Expansion & Capacity: The company raised its FY28 target capacity to 155 MTPA (up 15 MTPA) via debottlenecking initiatives which implies growth without heavy new capex.

*Risk & Outlook Considerations*
While the operational momentum is strong, the reliance on tax reversals for profit growth warrants caution. The company’s cost‐target (exit FY26 cost ~₹4,000 per MT) and aim for ~₹3,650 per MT by FY28 suggest margin improvement is part of the journey ahead. Demand risk (monsoon headwinds, housing/ infrastructure slowdowns) remains a factor.

*Conclusion*
Ambuja Cements’ Q2 FY26 results are impressively strong, with volume growth ahead of the industry, margin expansion and a sharply improved earnings line. The premium‐cement push and cost discipline show operational maturity. Key factors to keep an eye on include whether sustained margin improvement continues without relying on tax‐provision benefits, how well the expansion to 155 MTPA unfolds and whether demand remains strong in the second half given macro risks.

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