MUMBAI: Ambuja Cements is resetting its expansion strategy after falling short of its own expectations, with promoter Karan Adani signalling a sharper focus on cost discipline and execution as the company reins in earlier growth plans.
“I think why the reset, I mean it’s quite evident our performance has not been great. We have not been able to deliver what we have promised to our shareholders,” Adani told analysts in a post earnings interaction on Monday, adding that the reset was driven by the need to correct course and regain control over execution. “If I would say 80% of it is to do with the cost and we really need to get our act in order…to make sure that we are able to reduce our cost.”
The company has also adopted a more cautious approach to capital allocation, effectively deferring parts of its earlier expansion timeline and prioritizing stabilization of existing assets. “Till the time we are not able to deliver on what we are promising, it does not make sense to make more capital investment,” Adani said.
At the core of this reset is a renewed emphasis on building the right team and execution capability, an area where the company admits it underestimated the challenge post-acquisition. Adani pointed out that when Ambuja and ACC were acquired in September 2022, “at that time there was no team, so it took us time to build up that team as well”.
Leadership changes have accompanied the shift. Ajay Kapur, managing director of Ambuja Cements, superannuated effective 31 January 2026 and was succeeded by Vinod Bahety.
Cost pressures
India’s second-largest cement maker by capacity, Ambuja Cements Ltd, missed Street expectations on revenue in FY26, as elevated costs, including escalation linked to the West Asia conflict, goods and services tax (GST)-related changes and state elections, dampened demand, while utilization at acquired assets remained subdued.
The newly added plants, particularly Sanghi and Penna, have seen lower utilization. Sanghi operated at 57% cement capacity utilization for the full year, while Penna was at 46%, Bahety said.
The company reported consolidated revenue from operations of ₹40,446.04 crore for FY26, up 19% year-on-year, but below the consensus estimate of ₹41,361.71 crore of 40 analysts polled by Bloomberg. Profit attributable to owners rose 10% to ₹4,728.18 crore for fiscal 2026, as per exchange filings. Total expenses increased 19% to ₹37,910.76 crore in FY26 compared to FY25.
“FY26 has been year of resilience for the cement sector which has witnessed consolidation, GST 2.0 reforms on one side, while adverse weather conditions, global geo-political factors and state elections affected the industry and demand in some or the other way,” said Bahety, chief executive officer of Ambuja, in a post-earnings interaction with analysts on Monday.
Operating Ebitda rose to ₹6,539 crore in FY26 from ₹5,971 crore in FY25, though margins declined to 16.1% from 16.9%. The company produced 73.7 million tonnes of cement in FY26.
“We have seen some disruptions in March given the West Asia war…higher fuel cost and higher packing costs,” said Bahety. “On the cost front, we have seen a bit of a higher cost compared to our own expectations and therefore some disappointment.”
Analysts questioned Ambuja on elevated costs despite earlier guidance of exiting at lower levels, noting that much of the pressure appeared industry-wide. In response, management said the ₹4,000 a tonne figure was an aspiration for the exit month rather than a quarterly average, and that several internal factors kept costs closer to ₹4,500 a tonne. These included plant breakdowns that raised repair and maintenance costs, higher spending on branding and sales promotion, inefficiencies in fuel usage, and abnormal spikes in packing costs, particularly in March. As a result, the company was unable to bring costs down as expected during the quarter.
Fuel costs rose up to 20% in FY26 to ₹10,023.78 crore, while freight costs increased 14% to ₹9,497.28 crore.
For the March quarter, the cement maker reported a 10% rise in revenue from operations to ₹10,891.68 crore and a 78% jump in net profit to ₹1,830.15 crore, aided by tax gains.
“Cost pressures from fuel, diesel, packaging bag supply constraints, and rupee depreciation impacted this quarter and impact expected to continue in H1 FY27,” the company said in a press release.
Looking ahead, Bahety expects “inflationary pressure and weak monsoons” to weigh on demand, which “is expected to remain a little soft.” He added that as demand weakens, pricing pressure intensifies, and despite rising costs, the industry continues to face constraints in passing on price increases.
“The company’s cost-cutting efforts have not delivered results, as its costs increased materially in Q4—an outlier in the entire industry. Underutilization and higher cost for the Sanghi and Penna assets also weighed on performance, alongside concerns over declining cash balance. Planned capacity additions have now been deferred,” said Satyadeep Jain, lead analyst for cement, metals, mining and utilities at Ambit Capital.
