Ambuja Cements Posts Strong Q2 Profit Jump Driven by Tax Write-back, Boosts Capacity Target

Ambuja Cements announced a consolidated net profit of ₹1,766 crore for the September quarter, a substantial leap from ₹480 crore in the same period last year. This surge was primarily due to a significant tax write-back of ₹1,465 crore, contrasting with a tax expense of ₹248 crore in the previous year. Profit before tax saw a 13% year-on-year increase, reaching ₹838 crore from ₹744 crore. The company's revenue for the quarter climbed 22% to ₹9,175 crore, its highest-ever second-quarter topline.

Ambuja Cements also outlined ambitious growth plans, raising its financial year 2028 (FY28) capacity target by 15 million tonnes per annum (MTPA) to 155 MTPA, from the earlier goal of 140 MTPA. This expansion will be achieved through debottlenecking existing facilities at a lower capital expenditure (capex) of $48 per tonne. Furthermore, the company is investing in 13 blenders over the next 12 months to enhance its premium cement offerings and improve realisations. Logistics infrastructure upgrades are also planned to boost capacity utilisation by 3% in the next two years.

Vinod Bahety, Whole-Time Director & CEO, expressed optimism, noting favourable industry developments like GST 2.0 reforms and the Carbon Credit Trading Scheme (CCTS). He anticipates double-digit revenue growth and four-digit PMT EBITDA for the remainder of FY26. The company aims to reduce its cost per tonne to ₹3,650 by FY28.

Impact: This news indicates strong operational performance and a clear growth strategy for Ambuja Cements, potentially benefiting its stock price and signaling a positive outlook for the Indian cement sector. Rating: 7/10

Difficult Terms: Consolidated net profit: The total profit of a company and its subsidiaries after all expenses and taxes. Tax write-back: Reversal or reduction of a previously recorded tax liability, often due to changes in tax laws or assessments. Profit before tax: The profit a company earns before deducting income tax expenses. Revenue: The total income generated from the sale of goods or services. MTPA (Million Tonnes Per Annum): A unit of measurement for annual production capacity, commonly used in industries like cement and steel. Debottlenecking: Process of identifying and removing production constraints to increase overall output capacity. Capex (Capital Expenditure): Funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment. Blenders: Machinery used in cement manufacturing to mix different components to achieve specific product qualities. Realisations: The actual price received by a company for its products or services. Capacity utilisation: The extent to which a manufacturing plant's actual output measures up to its potential output. GST 2.0 reforms: Potential future enhancements or changes to India's Goods and Services Tax system. Carbon Credit Trading Scheme (CCTS): A market-based mechanism where entities can buy and sell credits representing the right to emit a certain amount of greenhouse gases. PMT EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization per metric tonne. It's a measure of operational profitability. Cost per tonne: The total cost incurred to produce one tonne of cement.