Ambuja Cement Q1 net profit down 29%, revenues fall 5%

Ambuja Cements Ltd., part of the Adani Group, on Wednesday reported a consolidated profit of ₹646.31 crore for the first quarter of the current fiscal year (Q1FY25), marking a 28.6% decline year-on-year. This drop in net profit was attributed to rising expenses and lower revenues. 

In the same quarter last year, the company had reported a consolidated profit of ₹905.61 crore attributable to its owners.

Consolidated revenue from operations fell 4.6% year-on-year (YoY) to ₹8,311.48 crore, driven by declining prices. Sales volume showed a slight increase to 15.8 million tonnes, up 0.4 million tonnes on year.

The earnings missed Bloomberg's estimates, which had projected a profit after tax of ₹743 crore and revenue of ₹8,440 crore.

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“Our persistent performance sets the tone for the rest of the financial year, as we expand our footprint and capacities across new geographies. Our continued improvement in costs brings visibility of achieving the targeted cost reduction of ₹530 per tonne by FY28,” said Ajay Kapur, whole-time director and chief executive, Ambuja Cements.

Earnings before interest, tax, depreciation, and amortization (Ebitda) fell 23.21% year-on-year to ₹1,280 crore, with margin at 15.4%. Ebitda per tonne fell to ₹807 from ₹1,082 in the corresponding period last year.

Total expenses rose to ₹7,566.91 crore from ₹7,469.74 crore the previous year. Despite this, the company reported a 3% year-on-year reduction in operating costs, attributing it to group synergies.

Looking ahead, Ambuja Cements anticipates cement demand to grow 7-9% in FY25, reaching around 451 million tonnes per annum (MTPA), supported by overall economic growth and rising demand from the housing and infrastructure sectors.

“The share of five companies has come to 60% versus some 45% in 2018, so, I think just by the size and scale, we have already seen consolidation happening. This is good as we mature as an industry you can either have organic growth or inorganic. We are doing both,” Kapur added. The company aims to increase its market share from the current 14% to 20% by FY28.

The company attributes this growth momentum to the government's infrastructure push in the FY25 budget outlay, expecting these measures to boost cement demand.

In the June quarter, Ambuja Cements signed binding agreement to acquire a 100% stake in Penna Cement Industries Ltd from its existing promoter group for an enterprise value of ₹10,422 crore. The company is in the process of integrating the acquired units and expects to benefit from the second quarter.

“With the Penna transaction expected to be closed by Q2 FY’25, our capacity will go to 89 MTPA and well on track to achieve our 140 MTPA plan by FY’28,” Kapur added.

As of 30 June, the company's consolidated cash and cash equivalents stood at ₹18,299 crore. “Approximately ₹6,000 crore has been utilized, including ₹3,300 crore for organic and inorganic growth, primarily for granular acquisitions, ongoing capex programs, and acquisition outflows with ₹630 crore, and the balance towards working capital,” Kapur noted.

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The company is also progressing with a brownfield expansion, including 14 sites for an 11 million tonne clinker facility and 23.4 million tonne of cement capacity. Additionally, preoperative work for a 28 MTPA grinding facility and a 22 MTPA clinker facility is underway.