Ambuja Cements Posts Record Q2 Sales Volume, Driven by Successful Acquisition Integrations and Cost Efficiencies

Ambuja Cements has reported a landmark second quarter, marked by its highest-ever Q2 sales volume of 16.6 million tonnes, representing a robust 20% year-on-year growth. This impressive performance is largely credited to the successful integration of its acquired entities: Sanghi Industries, Penna Cement, and Orient Cement. Analysts note that these acquired assets have been fully transitioned to Adani Cement brands, thereby enhancing Ambuja's distribution network and pricing capabilities.

Despite a subdued market and pricing adjustments post-GST, Ambuja Cements maintained stable realisations, with average cement prices declining by only 1% sequentially and growing 3% annually. This stability is attributed to higher pricing from the integrated acquired assets and a sustained 35% share from premium cement sales, which grew by 28% year-on-year.

Cost efficiencies were another key driver. The company benefited from integration-led sourcing gains, adoption of green power (now constituting 33% of consumption with 673 MW of solar capacity commissioned), and logistics optimization, which reduced lead distances. Raw material costs per tonne fell 22% year-on-year, and logistics costs per tonne decreased by 7% year-on-year.

These operational strengths translated into significant profitability gains. Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) surged 58% year-on-year to Rs 1,761 crore, with EBITDA per tonne reaching Rs 1,060. Notably, Ambuja's EBITDA per tonne remained flat sequentially, contrasting with a 20-25% drop seen by other major cement players.

Impact This news is highly positive for Ambuja Cements, indicating successful strategic execution and operational improvements. It suggests the company is well-positioned to outperform peers and achieve its future cost reduction targets, potentially leading to increased investor confidence and stock valuation. Rating: 9/10.

Difficult Terms Explained: EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortisation. It is a measure of a company's operating performance, showing profitability before accounting for financing decisions, accounting decisions, and tax environments. EBITDA per tonne: EBITDA divided by the total volume of cement produced or sold, serving as a key metric for operational efficiency and profitability in the cement industry.