Earnings call transcript: ACC Q2 2025 revenue beats forecast, stock dips

ACC Ltd reported its Q2 FY26 earnings, revealing a mixed financial performance that saw the company surpass revenue expectations but fall short on earnings per share (EPS). Despite achieving its highest-ever sales volume and a significant increase in profit, the company’s stock experienced a slight decline in the open market.

Key Takeaways

• ACC achieved its highest-ever sales volume at 16.6 million tons, a 20% year-over-year increase.
• Revenue reached ₹9,174 crore, marking a 21% increase from the previous year.
• EPS fell short of expectations, coming in at 15.8 against a forecast of 17.75.
• The stock price fell by 0.9%, closing at ₹1,881.5.

Company Performance

ACC’s performance in Q2 FY26 was highlighted by a strong increase in sales volume and market share, which rose to 16.6%. The company reported a profit after tax of ₹2,302 crore, up 364% year-over-year, demonstrating significant operational efficiencies and market expansion. The cement industry grew by 4% during the quarter, with ACC outpacing this growth through strategic initiatives and product innovations.

Financial Highlights

• Revenue: ₹9,174 crore, up 21% year-over-year
• EBITDA: ₹1,761 crore, a 58% increase from the previous year
• Profit After Tax: ₹2,302 crore, up 364% year-over-year
• EBITDA margin: 19.2%, up from 14.2% last year

Earnings vs. Forecast

ACC reported an EPS of 15.8, which missed the forecasted 17.75 by approximately 10.99%. Despite this miss, the company managed to exceed revenue expectations, reporting ₹58,510 crore compared to a forecast of ₹52,990 crore, a surprise of 10.42%.

Market Reaction

Following the earnings announcement, ACC’s stock price declined by 0.9%, closing at ₹1,881.5. This movement placed the stock closer to its 52-week low of ₹1,778.45, reflecting investor concerns over the EPS miss despite robust revenue growth.

Outlook & Guidance

ACC has set ambitious targets for the coming years, with plans to expand its capacity from 107 million tons per annum (MTPA) to 155 MTPA by FY28. The company is also focusing on cost reduction strategies, aiming to lower costs to ₹3,650 per ton by March 2028. These initiatives are expected to bolster ACC’s competitive position in the market.

Executive Commentary

Vinod Bhatti, CEO of ACC, expressed optimism about the company’s growth trajectory, stating, "We are bullish to achieve double-digit growth for next many quarters." He emphasized the importance of ongoing improvement plans and the positive impact of synergies from recent acquisitions.

Risks and Challenges

• The company faces potential challenges from fluctuating raw material costs, which could impact profitability.
• Market saturation and increased competition in the cement industry could pressure ACC’s market share goals.
• Macroeconomic factors, such as changes in government policy or economic slowdown, could affect demand for cement.

Q&A

During the earnings call, analysts inquired about ACC’s working capital increase and the company’s capacity expansion strategy. Executives clarified their approach to debottlenecking and technology upgrades, highlighting the integration of acquired assets as a key driver of future growth.

Full transcript - ACC Ltd (ACC) Q2 2026:

Conference Operator, BNP Paribas Securities: Ladies and gentlemen, good day and welcome to the ACC Q2 and FY26 earning conference call hosted by BNP Paribas Securities. As a reminder, all participants’ lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing then 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nilraj Jain. Thank you, and over to you, sir.

Nilraj Jain, Representative, BNP Paribas Securities India: Yeah, hi. Thank you. Good evening, everyone. On behalf of BNP Paribas Securities India, we welcome you all to the Q2 FY26 earnings call of Ambuja Cement Limited. Without any further delay, I’ll hand over the call to Mr. Deepak Balvani, Head of Investor Relations. Over to you, sir.

Deepak Balvani, Head of Investor Relations, ACC/Ambuja Cement: Yeah, thank you. On behalf of ACC, I’m pleased to welcome all the participants to our Quarter 2 FY26 earnings call. Before we start, please note that this call may include forward-looking statements based on our current beliefs and expectations. These are not guarantees of future performance and may involve unforeseen risk and uncertainty. We remain committed to further strengthening our disclosure standards and improving the quality of our capital market communications to the best in the industry. What a quarterly performance. Existing capacities increased to 107 MTPA in Quarter 2, with EBITDA reaching ₹1,060 PMT. The total target capacity is now set at 155 MTPA, among other several notable updates. We are pleased to have with us on the call Mr. Vinod Bhatti, Chief Executive Officer, and Mr. Rakesh Trivari, Chief Financial Officer. Now I invite Mr. Bhatti to provide his valuable insights on the quarterly performance.

Vinod Bhatti, Chief Executive Officer, ACC/Ambuja Cement: Thank you, Deepak. Good afternoon. On my behalf and on behalf of my management team, welcome to all joining us for this second quarter of FY26 earnings call. Wishing you a very vibrant, festive season, which has also got extended with our woman in blue winning the Maiden ICC Cricket World Cup 25. Likewise, friends, I’m equally jubilant to share the all-round robust performance of ACC, maintaining a strong momentum. This was driven by concerted branding, marketing, and other initiatives, thereby increasing our customers’ preferences for premium products and a larger vibrancy amongst our dealers and supply chain partners. This resulted in differentiated volume growth and improved realizations, thereby helping us achieve EBITDA of INR 1,060 per metric ton, a jump of 32% year on year, while EBITDA margin stood at 19.2%. Uptick of 5% compared to last year’s 14.2%. This quarter has been noteworthy for the cement industry.

Despite the headwinds from the prolonged monsoons, the sector will benefit from the tailwinds of several favorable policy measures, including GST 2.0 reforms. Likewise, this quarter has been instrumental for ACC. Our group synergies and efficiency measures have started yielding results. Total cost reduced by 5% year on year, led by kiln fuel cost at INR 1.65 per thousand kilocalories, and this is excluding the AFR. If I include the AFR, it becomes INR 1.60 per thousand kilocalories. At INR 1.65, excluding the AFR, it is lowest amongst the peers, and it is likely to sustain or be further reduced with the increasing trend of AFR. Exit of FY26, we are targeting to deliver total cost of INR 4,000 per metric ton, which is a 5% reduction from the current levels of INR 4,200.

The exit of September has been 4,200 cost per ton, which I’m targeting to deliver at 4,000 by March 2026. Likewise, in FY27, we aim for a 5% reduction and another 5% in FY28. By the end of March 2027, we are aiming to hit INR 3,800 a ton, and by the end of March 2028, it would be around another 5%, which will be INR 3,650 per ton. Another important initiative we have launched during this quarter is the debottlenecking of our plants and the logistics infrastructure. These debottlenecking initiatives across the plants will add 15 million tons in our capacity at a much lower capex of $48 per ton, and this capex is on an integrated investment basis. There were some questions, so I want to clarify. This $48 per ton is on an integrated basis, which would mean a combination of GU and IU investments.

This is the combined capex for clinkerizing plus grinding, as I mentioned. With this additional 15 million tons, we now revise our target capacity from 140 to 155 by FY28. Simultaneously, my clinker capacity also goes up from the current target of 84 to almost 96 million tons by FY28. In addition, friends, we have also initiated logistics debottlenecking, and this will improve current capacity rotation by 3%, which would mean that my current 107 million tons will have a better evacuation of 3 million tons, and this we will achieve in over 24 months. We are also installing 13 blenders at our plants over a period of 12 months, which will optimize the product mix and the share of premium cement, thereby improving our overall realization. Very importantly, we have launched CINOC, CINOC Cement Indulgent Network Operations Center. This will enable a paradigm shift across the business operations.

AI will run deep into our enterprise fabric, bringing efficiency, productivity, and deeper engagement with the stakeholders across the value chain. As a business, we are getting younger by the day, with our average plant age falling by almost 50% by FY28. Our average age of employees has also substantially improved from where we started, and now we stand at almost 38 years. Integration of Penna and Orient Cement has been one of the fastest, I would say. Wherein the entire sales, except the initial few days for Orient, otherwise the entire sales has been under the Ambuja and ACC brands. This has been well received by the customers, supply chain partners. This has also resulted in sharp improvements in the profitability of these companies.

Adani Workplace Management System has been institutionalized and helping to reinforce plant working conditions and overall help on reliability, environment, safety, quality, which we call it as a rescue program. We are also engaging and investing in R&D and technologies, which will provide an edge in our ESG scores improvements. Such programs have also helped us in the past to provide cement for several marquee national projects, the most recently Navi Mumbai International Airport. A few months back, Chenab Bridge Single Arch Railway Bridge, the upcoming World’s Tallest Temple, amongst so many other projects. In terms of the consol financial performance, friends, I’m happy to share we have achieved the highest-ever sales volume at 16.6 million tons, up 20% Y on Y, which is almost five times higher in terms of the industry average, which has grew at the industry level to 4%. We have grew 20% Y on Y.

Market share is also up 1% to now 16.6%. Revenue stands at INR 9,174 crore, up 21% Y on Y, and there has been a price gain of 3%. This is also supported by a share of premium products as a percentage of total trade sales at 35%. However, if I look at the expanded volume of the premium products on the larger capacity, there is an overall growth of 28% Y on Y of sale of premium cement. Cost has improved by INR 238 per metric ton Y on Y. This has also supported in achieving the quarterly EBITDA of INR 1,761 crore, which is up 58% Y on Y. Profit after tax is at INR 2,302 crore, up 364%.

Of course, we will have some of your questions on one-time INR 18,360,000,000 profit provision for the tax write-back and all, which I have already highlighted in more detail in the investor deck. Even if I exclude that, there is a quantum substantial improvement on the profit after tax. Earnings per share is at INR 7.2 per share for the quarter, which is up 267%. Net worth at INR 694,930,000,000, up INR 30,570,000,000 for the quarter, and the company remains debt-free with the highest rating of CRISIL AAA stable and short-term A1 plus ratings. We have maintained that. In the interest of time, friends, I will not discuss the standalone financial performance of the listed companies, as these details are already available on the stock exchanges.

In terms of the operational excellence, green power share has increased to 33% in the second quarter, with renewable energy capacity at 673 megawatts expected to reach almost 900 megawatts by the end of this financial year and 1,122 megawatts by FY27. We also strengthened the ecosystem engagement through collaborative efforts with CREDAI initiatives like Nirman Utsav. We launched the Adani Cement FutureX, which covers almost 400 academia, both schools and institutions, covering 400,000 students. We deepened our B2B engagement with initiatives like SAMVAD. We launched Dhan Varsa, the CEO Club platforms, and some of you would have already experienced it. Strategic partnership with Concor for the movement of the tank container will support in terms of net zero emission commitments, and also there will be an opportunity of setting up the bulk cement terminals.

In terms of my growth and expansion journey, friends, my current capacity stands at 107 million metric tons, and this is cement. For clinker, it is almost at 65 million metric tons. The ratio is generally around 0.6 to 0.62 of the cement. Our FY28 target, as I mentioned, has been revised to cement at 155 million tons and clinker almost at 96 million tons. This incremental 15 million tons, as I mentioned, comes from debottlenecking at a much lower capex on the integrated basis. Greenfield and brownfield expansions are progressing quite well at Salai Banwa, Marwa, Mundwa, Penna Marwar, Dahej, Kalamboli, Bathinda, Jodhpur, Varisali Ganj. All of them will be up and running by the end of this financial year. Three of them will be coming in Q3, which is Salai Banwa, BCCI, and one more, which is Dahej.

The rest will be coming by the end of this financial year. Trial runs have started for the Bhattapara clinker line, which is 4 million tons, while I already announced the operational status of Krishnapatnam, 2 million tons of grinding unit, which takes up my capacity to 4 million tons at Krishnapatnam. We are adding almost 11.2 million tons in FY26, and we will be hitting almost 118 million tons by the end of this year. By FY2027 and FY2028, we should be then in a good shape to achieve 155 million tons. For this discipline, the CapEx management ensures timely execution, scale profitability, and the optimize of the operating leverage. On the cost leadership, friends, which is our key focus area, and from the beginning, we have been highlighting this, our cost has reduced by almost 5% Y on Y, primarily led by the kiln fuel cost.

I mentioned the numbers. In terms of my second half, by the end of this financial year, we should, and we are actually aiming at almost INR 4,000 a ton, followed by 3,800 and then 3,650 by FY2028. Green power share is up by 14.3% to almost 33% in Q2, and it is progressing very well. By FY2028, we should be hitting 60% in line with our earlier announcements. This will help me to achieve almost INR 1.5 per unit cost reduction from my current levels of INR 6 to almost, it should be hitting INR 4.5 by FY2028. The efficiency factors in terms of the kiln, the heat consumption, and the power consumption are going to improve with the additions of the new capacities, which are with the latest technologies.

The kiln fuel cost, including the AFR, is reduced by 2%, which I mentioned to 1.60, and so on and so forth. So far as logistics is concerned. Logistics, the primary lead distance is down by, say, 2 kilometers and now stands at 265, and we are expecting another 50-kilometer reduction as we expand our geography in terms of the GUs. For this quarter, logistics cost has come down by almost 7% Y on Y at 1,224. CINOC, which is a key subject which we are working in terms of digital transformation, and that is something which I will invite some of you to actually experience it because that is instrumental in terms of bringing a paradigm shift in my day-to-day business working, efficiency, transparency, and real-time collaboration across the value chain with the stakeholders.

From the ESG leadership perspective, friends, we have noteworthy improvements right from SBTi validating us for the near-term to long-term, and lots of developments are happening in this regard. I had mentioned earlier we have signed an MOU with the Cool Books of Finland, and things are progressing quite well. We are water positive 12 times on an annualized basis, plastic negative, and in terms of tree plantations and so on and so forth, lots of works are going from an ESG perspective. CCTS augurs very well, given that the new capacities are very efficient ones, and therefore it will help me, it will help the business in terms of generating positive carbon credit, and which will be also incremental in terms of generating income as and when the overall model matures.

As per my rough estimate, it should provide at least INR 2.00 billion-INR 2.25 billion additional income by virtue of positive carbon credits as and when this framework gets more mature. This I have calculated at $8-$10 per ton of the carbon credit. So far as people at the core, we are actually building future capability by blending the fresh talent with digital skills and a culture of ownership and continuous learning and empowering our people to deliver results. Lots of initiatives and actions are being done for community and social impact. We are also putting lots of efforts on brand and stakeholder engagement. The brand track research report with Ipsos, Ipsos is the agency, and it has revealed recently the report which has come, it has revealed quite positive trends in top-of-the-mind awareness and strong ACC Brand Association.

By the way, some of you would know that now ACC Brand has got shipped into our overall cement business, and it is giving us quite positive results. The synergies are really bringing that positive trend in the business. We have, through digital and mass media, touched almost 300 million individuals pan-India, and the series of initiatives like Heroes of ACC and so on and so forth, for example, which are available on digital platforms, and I am sure some of you have seen it. It brings quite stories of vibrant stories of our dealers and brings a very close emotional brands with connect with them.

Technical services, which is like a very important focus area, which was initiated long back within, say, ACC and Ambuja, that is like seeing a very robust trend, and we have now this year 35,000 contractors enrolled, almost 14,000 sites, what we say ACC Certified Technology sites, which actually uses purely our premium cement, and these numbers are growing, and we do lots of workshops and lots of technical events. On the industry outlook and my closing thought, friends, cement demand, I remain bullish. In Q2, although it was moderate and grew by, at the industry level, say 4%, but my overall yearly target remains between 7-8%. GST reduction from 28% to 18%, where all the benefits have got passed to the customers, and I am sure this will bring more demand for especially good brands like ACC Cement and more so the demand for the premium cement.

There is an improved economic sentiment, higher investments in both public and private sector, and in summation, it augurs very well for the industry. I would now hand it over back to the moderator for the questions and answers. Over to you, BNP team. Thank you. Thank you, sir. Thank you very much, ladies and gentlemen. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use headset while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. Our first question comes from the line of Amit Morarka from Axis Capital. Please go ahead with the question, sir. Yeah, hi, good evening, and thanks for the opportunity.

The first question is on cost. It’s a great reduction in the cost, but just wanted to understand a bit more on other expenses because unusually, other expenses per ton as well are dropping. In Q2 versus Q1, given that Q2 is a maintenance quarter. Just wanted to understand. Is it lower kiln maintenance has happened in Q2, or is there some other factor like lower advertisement spend and all which has driven down other expenses? No, so Amit, thank you. You’re referring to so far as other expenses of INR 774 a ton versus INR 712 a ton, right? This primarily, Amit, no, of course, the kilns have gone through maintenance, and the benefits of this maintenance will actually come in the coming quarters.

Cost, for example, remains a focus area for us, Amit, and therefore this reduction of almost INR 62 per ton comes from the improved synergies and efficiency gains. In terms of, we have also improved our overall sales promotion and marketing strategies with a very analytics-driven branding and sales promotion, with the more effective media than the costly media. For example, you’ll see more of us into lots of digital and other footprints. I would say that other expenses is a factor of all of these initiatives, but nothing to worry about any maintenance, etc., which have been underplayed in this quarter. Okay, okay, sure. Thanks for that. Just secondly, on working capital, your cash flow statement shows an increase of about INR 2,000 crore in working capital in the one inch. Even earlier, like last year, also we saw some increases in working capital. We just want to understand.

What is the reason for this increase? Is it some receivables, some advances? What were really the reasons for this? Yeah, Amit, so far as Q2 is concerned, there are two factors. One is, yes, receivables when you have a higher degree of sales on the non-trade side, and Q2 being generally subdued given the monsoon and all, this tends to increase your overall receivables to the B2B customers. Second is the overall inventory, and somewhere you will find our responses that there is a higher closing stock of both finished goods. Also, when you said about maintenance, so a higher stock of the spares and consumables which is there, for example. I have the numbers, but essentially, your INR 2,000 crore is a combination of these three factors. What we have done is, as part of the mitigation, we have built up almost two, three months of coal inventory.

If you see, this has moved very well in our favor. Therefore, even for Q3, I’m optimistic to sustain the coal cost and remain the lowest cost on the kiln coal in the industry because of this inventory of coal also available to us, which is at a lower price. So coal, finished goods inventory, then inventory of clinker, then inventory of stores and spares, and then, of course, receivables which also tends to go up when it comes to quarters like September. These are the factors, but I have very strong improvement plans in Q3 on this front. Understood. Thanks for the elaborate response. Just a very last question on the debottlenecking. While the cement debottlenecking plant-wise, I think, is given in the presentation, you mentioned that there is clinker debottlenecking also.

Can you provide maybe further details on that as well as to which units will see the debottlenecking at clinker level? Yeah, yeah. We will be setting up another three kilns, Amit, almost 12 million. Earlier, we had given 80 million, sorry, 82 million. Sorry, it was 84 million tons for FY2028 target, if you remember. Now that 84 is becoming 96. Generally, my kilns are 4 million tons. So three more kilns will come up. Broadly, I remember one is going to come up in Bhattapara itself. We have two major blocks over there. One is the existing Bhattapara, and second is Chilati, which is about, say, 25 odd kilometers from Bhattapara. Chhattisgarh is one area which we have sizable limestone reserves. We are going to look at that.

One more, for example, we have plans in terms of, as we improve and progress, is Sanghi, which we will announce in due course. These are my potentially low cost. Sanghi, for example, has all the potential to become one of the lowest costs of clinker. It has all the good probability of me setting up clinker there. Bhattapara, you know, has been our strength. A few more, for example, which will come up. North and west primarily, for example, remains where we have a substantial strong advantage, and we have also seen a significant improvement in terms of our brand loyalty and all. These are geographies which will see these expansions coming up. Okay, okay. Thanks a lot and best wishes. Thank you. Thank you, sir.

Ladies and gentlemen, in order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit the question to two questions per participant. Should you have a follow-up question, please rejoin the queue. Our next question comes from the line of Naveen Sahadev from ICSE Securities. Please go ahead, sir. Yeah, good evening, sir. Am I audible? Hello? Yeah, Naveen. Great. Thank you for the opportunity and congratulations on a good set of numbers. Two questions. One is on debottlenecking. If my memory serves me right, under the previous management, we never really heard ACC Ambuja doing any sort of debottlenecking, while every other company would have thrived on this opportunity. In the presentation, you’ve given 13 locations, whereas I believe you have 45-46 locations in total. I just wanted to understand. Naveen, you’re not audible. We lost you.

Naveen, are you there? Naveen sir, if you’re there, please respond. Hello? Yes. Naveen sir, please go ahead with the question. Sorry, I lost again, and I’ll just repeat the question. If my memory serves me right, historically, or in the previous management, I mean to say, there was never a debottlenecking kind of a thing which we heard from ACC and Ambuja. Now that we are hearing, and congratulations for that, my question is, it is at 13 locations. Is it fair to say that this is all that we have identified, or given that we have 45-46 locations, there is more scope? In the same breath, you said we are adding new clinker lines altogether. This is not per se debottlenecking of clinker in that sense. We’ll be adding new clinker, whereas adding more mills to get cement capacity.

If you could just help us understand this overall debottlenecking bit a bit. Thank you, Naveen. I think debottlenecking in cement, first of all, we should know how it happens. Some of our plants which are having the roller press, and with, sorry, with some of these plants which have these ball mills, for example, you actually put up a roller press also which will complement with this ball mill, and that actually helps you to have a higher grinding capacity. That is like a simplified way of explaining debottlenecking. Now, yes, we have identified 13 locations, which would mean that these 13 locations would have the ball mills, and which would be complementing with the roller press. To your point, this is like our phase one, Naveen, and which comprehensively covers it. Whether we will have more of them, yes, I think down the line we will.

Right now, these are low-hanging fruits for us to immediately move on that. So far as clinker is concerned, clinker for us, for example, we will keep adding it to also meet our expanding GUs and also these additional capacities of the debottlenecked assets. One-to-one mapping you would not do because these are all phased manners. Suffice to say that we are now going to add up almost three more lines, which would take my clinkering to almost 96 million tons. As I mentioned, Bhattapara and Maratha will be commissioning sooner, and Penna Marwad also will be commissioning sooner. This month, for example, we should be having light-up of Penna Marwad as well. Every passing quarter, we are seeing a good moment of clinker capacity additions also. But what comes first, for example, that is like a complete detailed planning.

We will be well balanced on clinker and GU at 155 million. Yeah. Third, in the same breath, then I would say debottlenecking of logistics. Now, this 3%, when we look at it, because we have the grinding, but sometimes the evacuation becomes a bottleneck, and therefore this exercise, which has been done quite extensively through consultants and all, and this 3%, which will be straight 3 million tons of unlocking of capacity through logistics debottlenecking, will get complementary to us. I would say then when we say blenders and all, it is nothing but, in a way, debottlenecking of the product portfolio because otherwise the silo storages and all are very that way. Limited to any plant. You cannot have unlimited storages. And therefore, when you can have blenders and all, it will help us to have much more optimized product balancing and move into the premium cement.

All of this actually helps you to unfold the overall capacity. But clinker debottlenecking also will come through, and for which we are actually doing studies around that, and I will come separately on that aspect. So my current 65 million tons of clinker capacity would definitely also have a scope for debottleneck. Yeah? Oh, thank you for clarifying. Thank you for clarifying because that’s what the clarification I sought, that existing clinker, you’re saying there is scope to debottlenecking that as well. Yes, yes, yes. So Naveen, at Sanghi at 6.5 million tons, now Sanghi, for example, this 6.5, typically this kind of plants always have a 5-10% of inbuilt cushion also, Naveen, for example. And when I speak to my technical guys, they tell me that if things all go well, Sanghi can actually produce 7.5 million tons.

So I think in cement, the plants have inherent and intrinsic inbuilt capacity for debottlenecking. To start with, these are low-hanging fruits for me on the grinding, and clinkering will also follow soon. Understood. Sir, my second question then was on the maintenance cost. So in the last couple of quarters, the other expenses was on the higher side, and the reason given was that acquired assets, there is a higher maintenance for the acquired assets, so to say. Now, in this quarter’s press release, you’ve mentioned that the maintenance of these acquired assets is largely completed.

Now, what I wanted to understand from you is that given the backdrop of digitalization or AI integration and also the overall modernization initiatives that the company was taking, will this other expenditure continue to be on the higher side, or this is where we can say that it is peaked out and now it will taper down from here on? Thank you. Yeah, thank you. I won’t say it is peaked out because the digital initiatives have to sip in, Naveen, in terms of, let us say. The operating leverage benefit will surely help me to get the benefits in the coming quarters. When it comes to utilization of Penna or Sanghi, for example, which are still lower as compared to our estimates, for example, and therefore the benefits will surely flow in. That is the advantage of the operating leverage.

So far as technology is concerned, and that is where comprehensively we are doing at the plant level and at the business level, those, for example, will sip in maybe at least two quarters I will require to bring a strong revamping of the foundation and then put on the additional layers of the AIs and all platforms. These initiatives have been launched. They will bring marginal improvements apart from the operating leverages, which I mentioned, but the real improvements will begin from the next financial year. However, my optimism for INR 4,000 a ton by end of this financial year remains there in terms of the overall total project cost. Understood. Thank you, sir. Thank you. Our next question comes from the line of Rahul Gupta from Morgan Stanley. Please go ahead. Yeah, hi. Thanks for taking my few questions. First, continuing on the previous question.

You reported around INR 70 odd per ton of additional cost on back of both sales promotion and second on maintenance. Now, how much of this INR 70 odd would continue over the next two quarters? That is my first question. Yeah. Rahul, INR 70 per ton will proceed now with improved volumes coming from some of the acquired assets. Because we are doing it in a very systematic manner, and therefore some of the time which some of the assets, for example, Penna and Sanghi have taken, now that investments have gone, results will start flowing in. So far as the brand is concerned, see, that is like a very continuous exercise, and therefore you will see more benefits coming from it with the higher share of premium cement.

Even, for example, when I say that this will be maintained, sustained, and improved in terms of cost for marketing and sales promotion, the delta effect, for example, when I look at it, it is far, far superior. The Y&Y growth of 20% volume, for example, or even if I remove the acquired asset, the Y&Y growth becomes 11%, which outbids the industry in all means. That is actually, for example, I would not be so concerned about that. I would be rather looking at how it is helping in my overall metrices of revenue and the overall EBITDA and the premium cement, so on and so forth. The OPEX part for the maintenance will now be controlled, sustained, and reduced with the benefits of the improved capacity utilization for the acquired assets. Got it. My second question is, just help me understand. It is more like a clarification.

When you say that you would exit the year with INR 4,000 per ton of cost. Is it fourth quarter end? Is it March end? Can you help us understand that? And secondly, when you say 3,650 by fiscal 2028, is it the full year or March 2028, or is it fourth quarter, March 2028? Any clarification over here would be very helpful. Rahul, I would say pick it as March. So like 4,000 is exit of FY2026. Therefore, pick it as March 2026, likewise March 2027, and then March 2028. Got it. Got it. One final question is your RMC business is ramping up quite fast. If I look at the numbers, fiscal 2025. Share of RMC was more like 4% in overall revenues. This has become around 4.5% in first half. How should we look at this business from second half perspective and next couple of years perspective?

At what level share of RMC revenues would stabilize? That’s it from my thank you. Yeah. Good observation. Also, like RMX is building up quite well for us. And on a full-blown basis, let us say FY2028. And when I say in terms of my cement consumption in RMX, which will give you that claims, it would be around, say, ballpark, around 5%. So 5% of my full-blown capacity of cement RMX will consume. So almost we are targeting 365 odd RMX plants. In the next couple of years. And good thing is now RMX has also built up quite well on the EBITDA margin as well. So. Yeah, around 5% by FY2028. For the cement consumption in RMX. And how much does it reflect into your revenues, if you can help us understand? In terms of revenue, I think. Or let me ask this way.

What would be the cement consumption of RMC right now? Cement consumption of RMC is quite right now around. Between, say, around 2% odd. And as I said, this is ramping up to go up to 5%. Okay. Got it. Thank you so much. Thank you, sir. Our next question comes from the line of Manish Sumaya from Cantor Fitzgerald Land and Company. Please go ahead. Thank you so much. And congratulations again on a good set of numbers. There’s been a lot of discussion about costs, so maybe I’ll switch to. Volume growth. I think you had. 20% volume growth. In the latest quarter, and obviously, the industry is growing at much less. My question is. How sustainable is this growth? And then secondly, as you sort of go upmarket, go more premium, how are you balancing pricing and volume? Yeah. Thank you, Manish. Very interesting question.

I would go with the last quarter and the current quarter trend, Manish. Last quarter also, we delivered 20% year-on-year, and this quarter also, 20% year-on-year. Now, in terms of sustainability, I think quite bullish to achieve double-digit growth. May not be 20% when the acquired assets mature, and therefore the base goes up. Surely, double-digit growth is what we are targeting on strength of the strong brands we have, with top of it now the Adani brand also getting sipped into it. So far as the whole structure, when it comes to premium cement versus the overall volume growth, Manish, that will get very well balanced out. For example, we are looking at both the market share on one side and also the proportion of the growth of our premium cement. Both will go very well. We’ll see a good level of progression.

I will be looking at double-digit growth for next many quarters from here with the kind of capacity expansions we have already planned. For example, from 107 million tons, we are going to 118 million tons by end of this financial year, then almost like around 130-135 million tons by FY2027 and 155 by FY2028. The capacity itself is growing by almost 10%-15% every year. Therefore, I’m bullish about double-digit growth. My second question is, as you talk about the integration of Orient, Penna, Sanghi, how should we think about volume growth, margin growth, and market share growth over the next, call it, 12-15 months? If you can help us understand that, that would be really helpful. Thank you. Yeah. Very interesting. Thank you again, Manish. See, I also highlighted excluding the acquired assets, my EBITDA is almost at the base capacity at around almost INR 1,180 per metric ton.

With the acquired assets, which are right now giving me lower EBITDA, let us say the EBITDAs for Penna and Sanghi, for example, although there’s an MSA and all, but with the capacity utilization improvement, they should also get closer to the current levels. Even if I expect it to achieve four digits, we see a very healthy improvement in terms of the EBITDA to sustain four digits and then to grow from there. End target of FY2028, we had given our aim to achieve INR 1,500 EBITDA, and that is where, for example, these acquired assets will mature, apart from all our initiatives on the efficiency, on the debottlenecking, on the green power, and so on and so forth. That also, for example, entire table which we have given in the investor deck, the journey of reduction of INR 400 of cost.

This INR 400 is from my exit of March. So like INR 4,000 exit of March minus INR 400, INR 3,600 is what, for example, INR 3,600, INR 3,650 will actually come in. EBITDA, I’m optimistic to achieve for these acquired assets also healthier. Now that investments have gone into the maintenance and all, there’s also very good uptake in the demand in those clusters. For example, we are seeing a very healthy uptake of demand in the Western market where Sanghi is there. We are seeing a very positive uptake of demand in the Southern markets, for example, where Penna assets are there. Of course, Orient caters to West as well as to South, but primarily to West, which is again a very healthy, high-contribution, high EBITDA market like Mumbai.

I think acquired assets are doing—Orient has got one of the best profitability and all within a short period of time. Penna has also picked up quite well. Sanghi is now going to swing into a very substantial positive zone from this Q3 in terms of capacity and therefore from overall performances. I hope I have addressed your point, Manish, on both EBITDA and then the capacity and the acquired assets. Yes, you have. Thank you so much. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit the question to one question per participant. Should you have a follow-up question, please rejoin the queue. Our next question comes from the line of Rashi from Citi Group. Please go ahead. Thank you. Just a couple of questions.

On the balance sheet, you did talk about the working capital. Could you just give the bridge of the cash reduction from June until September? From June to September, Rashi, for example, I have in the investor deck given you that bridge from March to September, right? March to September. If I can just refer to the particular page, particular—yeah? If you go to the slide number, the slide is, right, 37. If you please go to the slide number 37, Rashi. Over there, there is a bridge in terms of the starting point, which is INR 10,125 crore, and the closing cash of September, which is INR 1,813 crore. In between, June, there was this INR 2,971 crore, and there is this capital market event of acquisition of INR 5,910 crore of Orient. Then there is a whole lot of investment activities of Capex programs and likewise.

If you have any specific details on this slide number 37, I will be happy to answer. This bridge is there in terms of cash flow. Yeah. I just wanted to understand INR 2,971 crore to INR 1,800 crore. INR 2,971 crore to INR 1,813 crore? Okay. Give me a minute more, but if you can come up with the next question, I will just dig on those details. The overall utilization was how much in this quarter? Utilization of capacity? Yes. Including all your acquired assets? Including all the acquired assets on a consolidated basis, Rashi, it will be around 65-67%. Of course, therefore, I have the benefit of improving it further. Even at 65%, for example, we are at these volume numbers, and the advantage of operating leverage will flow in for the coming quarters. Yeah. It is around 65-67% also.

Like you mentioned, that Penna was there in last year only for 45 days, and Orient was not in the base. If I were to exclude both these, would you have grown in line with the market, or would you have gained market share this year? This quarter? I would have grown almost, Rashi, two and a half times better than market. Industry average at 4% growth without Orient and Penna, I would be at 11% growth. Okay. If I take Penna for 45 days and no Orient, it is 11%. Yeah. Got it. Just sorry, one more question on the clinker expansion that you are talking about from 84 to 96 million tons. Is this—do you have a breakup? Rashi, not able to hear you, please. I said clinker? Can you please repeat? Sure.

The clinker like cement expansion you have given us, the debottlenecking expansion, the clinker debottlenecking that you were talking about, the 12 million tons, that is 84 going to 96. Any of this is in ACC, or the whole thing is going to be numbered? No, that is not debottlenecking, Rashi. I told debottlenecking on the clinker will come out with more comprehensive separately. That was for the incremental lines, which I mentioned to Naveen. Okay. Those are available. All right. Got it. Clinker debottlenecking? Sorry. Sorry? No, okay. You continue, and then I will respond on your cash and the bridge component. Yeah. If I can just—if you could just repeat the clinker expansion. We are going to get to 73 million tons of clinker by FY2026, right? By the close of FY2026? Yes. What are next steps from there? 73 goes to?

73 goes to almost now FY2028 numbers will go to around 96. In between FY2027, I will just let you know. Coming to your—just give me FY2027 clinker. So far as—because we will have Marward and all. Another you put, say, 8 million tons in between. From 73, it becomes 81, and from 81, it becomes 96, Rashi. This is the journey. So far as cash and cash equivalent is concerned from INR 2,971 crore, majorly it is going in terms of the CapEx program. Almost INR 1,400 crore is actually from CapEx program with respect to all these ongoing CapExes, right? Which are going to get commissioned in Q3, and some of it going to get commissioned in Q4. Got it. INR 1,400 crore was the CapEx in the second quarter, and INR 2,800 crore is for the first half, the CapEx? Yeah.

My average hit rate for the quarter is almost INR 2,000 crore, and we hit almost INR 8,000 crore of CapEx program in a year. That is right. Okay. Thank you. Thank you, sir. Thank you, ma’am. Our next question comes from the line of Riteshiah from Investec. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity, sir. First question, three parts. Sir, somewhere in the mail, we have written that we will be adopting latest technology on new capacities. It will improve operational efficiencies, and also it will reduce the average age of plants by 40%. Sir, how should we read into this? One is if you could elaborate on the technology. The second is on the operational efficiency, what you indicate on heat and power, if you could quantify something.

Third, basically, I presume average age of plants, it’s only because of the new assets, nothing to do with the old assets. If at all with the old assets, would we look to reassess the residual life of the plant and hence also depreciation going forward? Let’s ask one by one. First, your question is in terms of the efficiency. These technologies, for example, when we say latest technologies, they’re all like the 4 million tons of clinker, for example. When you look at that, the heat factor, the heat consumption comes to almost 680 kilocalories, yeah? Compared to that, for example, the existing heat consumption is almost like around 730-740. That straightaway, for example, these new clinkering lines will give the benefit in terms of averaging the heat consumption.

When it comes to power consumption, I’m aware that our power consumption is slightly higher than the industry leaders and peers, and that is where precisely we have an advantage to catch up on that. Typically, for example, if the current consumption is upwards of, say, 60 units on an average, the latest assets, basically, overall, say, investments, they will bring the new assets will come at less than 50 units per ton of, say, clinker. Now, and effectively, when you look at composite basis also, both cement and clinker, it will come down substantially. Nothing, for example, the only thing is when you add up the new investments, new assets, it will help us to improve the overall average of new plus existing ones. That is like where, for example, we see a good advantage what we have.

Despite a little old assets or higher average age, our current performance, therefore, has to be looked upon in that context, and then the improvement plan has to be seen in that context, the scope for us to improve. Hence, I this time mentioned 40% reduction, which happens in my overall average age by FY2028 when we go for these expansion plans. You had a couple of other questions, Ritesh. Therefore, for the journey of this INR 400 a ton, you will find INR 250 in terms of power and fuel, and these are like factors of consumptions apart from mitigating in terms of the rate and all, which we have demonstrated. What is your second question, Ritesh? I’m missing that. Yeah. Sir, just a related question.

Would we look to reassess the useful life of the assets that we have after the debottlenecking and equipment upgrades that we are doing? No, we have done that, Ritesh. I think one or two assets, for example, we will look at mothballing, and I will separately share with you the details, with all of you separately, with the details. That is insignificant in the overall scheme of things. For example, we constantly do that in the context of the market share and the overall additions of the new assets. As and when the new assets keep adding, we will look at some of the very old assets in terms of mothballing and then look for another level of expansion programs in those areas. Yeah? For right now, all my assets are up and running. Sure. This is quite useful.

For Wadi, we have—for Wadi, the line number one, for example, I did mention to all of you before, we have stopped using Wadi line number one, but that does not really affect my any kind of, say, source of clinker, etc., because that was pretty, pretty old, and we have dismantled it. Sure. Sir, second is just to have the comfort on the timelines for the commissioning, because when we look at one of the slides, when we compare it with the prior quarter, we find six of the projects, there is a delay of a quarter. This includes Bathinda, Bhattapara, Maratha, Salaibanwa, Jodhpur, Krishnapatnam. Sir, how should we read into this, or is it something like it will come on the revised timelines? Sir, how should one get more confidence over here, please? Thanks, Ritesh.

Again, for example, you have torrential rains and you have got flood-like situations across many parts of the country, and therefore, for example, some of this has become a result of some of the factors of delays. Generally, for example, when I say anything operational, I look at commercial operationalizing of the plant more than basically trial run and all. Therefore, for example, you will find meaningful outcomes of all these, for example, ongoing where the commercial production will start definitely before the Q4 and start giving us the benefits. Some of them are seeing at different stages of their pre-trials and all, and the trials will commence, and then the commercials will start coming in. I do not see any unreasonable delay. These are all part and parcel of the situation when you have rains and other issues. All right.

Sir, if I can squeeze in one, sir, you give a very interesting data point that the average age has reduced by—it has reduced to 38 years. Sir, how are you reading into this particular number? Is it natural attrition, or is it hiring younger workforce? How do you map it with the productivity of the firm? How are you looking at this number? This is important, Ritesh. I would love to answer this. I think what we have done is now the Cadder Hire program, for example. We have hired almost 1,300 GETs and DETs who are going through a very well-structured program of training. Almost by end of this year, they will complete one year, and they will be available in terms of absorption, right? Number one.

I think we are putting lots of good focus in terms of the holistic training across the various functions and in the entire business. I see productivity has been improving substantially, and on top of it, when you put the layer of technology. Therefore, for example, if you look at the HR cost per ton of cement, you will find ACC HR cost is one of the most efficient compared to my peers and all. I think the productivity will further improve once the digitization will seep in on a full-fledged basis. Sure, sir. Thank you so much for the answers. All the very best. Thank you, Ritesh. Thank you, sir. Our next question comes from the line of Patanji Srinivasan from Sundaram Mutual Fund. Please go ahead. Sir, congrats for a good set of numbers. I just have a couple of doubts.

One is we have done a very good job in ramping up our capacities from the time we’ve acquired assets, and we are going towards the cost reduction journey. What is the hurry for us to expand very fast, given that we are in a very good position where we are and our utilization is slightly dropping because of this? Okay. Patanji, thank you. I think you have a right observation in terms of the growth what we have achieved from 67.5 million when we acquired in September 2022 to now 107 million. So almost like a million tons per month is what we have grown. In terms of ramp-up, I think from beginning, on first day of the board meeting, we have announced we will go up to 140 million tons, and we are well on our journey to achieve that.

There is quite an organized and well-articulated strategy around that. What we have now just added is this 15 million tons of debottlenecking, which will take me to 155 million. This will substantially help me in terms of the overall efficiency and advantage of operating leverage. So far as capacity utilization is concerned, I do not think that is a concern so far as brands like ACC, Ambuja, and Adani Cement is concerned. From a capacity utilization perspective, we have been spending time in terms of the reliability of the machines, especially for the acquired assets post our Ambuja and ACC, more so like Sanghi and Penna, for example. Therefore, I told you Sanghi will have a sizable uptick in terms of capacity, so is Penna in incoming quarters. I am quite optimistic on this part. I think our share of market will continue to go up.

As of now, this quarter, we have increased by 1%, and our target is to hit almost 20%-22% by FY28, and this will continue. On support of a very strong supply chain. For example, right now, we are having almost 29,000 dealers, more than 50,000-60,000 retailers, and almost 700,000 contractors. They are all, for example, quite bullishly looking at the business and the business prospects on the strength of Adani, Ambuja, and Adani ACC. Yeah? Sure, sir. And just one last question, slightly arithmetic. A consolidated EBITDA per ton is 1,060. Standalone level, I think it is 708 for Ambuja. ACC is around 900. Can you explain the bridge between this? Does this mean that because of the MSA, we get better profits at consolidated level if we are standing on these numbers? That is true.

That is true, Patanji, because when you even therefore, look at the volume, you will find individual companies will add up. If you simply add up, the volume will be higher. But when it comes to console, the volumes get lower because in console, the inter-sale between the companies gets knocked off. And hence, this happens from an arithmetic perspective. Okay. What would be the utilization of these assets, acquired assets, roughly? See, my base capacity assets are at a very good utilization factor of upwards of 75%. And my acquired assets will vary. Therefore, for example, Orient is at a healthy level. It serves the Western markets and more so Bombay and all. Penna is a southern market, therefore gets influenced with the typical trends of southern industry.

And Sanghi, for example, being a coast-based plant and having torrential rains and all for Q2, I would not say that it will be reflective of its trend. But Sanghi should now be moving around in the range of 65%-70% in Q3 and Q4. Got it, sir. Thank you. Thank you, sir. Ladies and gentlemen, due to the time constraint, that was the last question for today. I would now like to hand the conference over to Mr. Deepak Balvani for his closing comments. Thank you, and over to you, sir. Thank you. I trust most questions have been addressed. Should you wish to discuss any outstanding query, we are available for a separate conversation from 5:15 P.M. to 5:45 P.M. You have my contact number. Please feel free to call me. Thank you. Thank you so much. On behalf of BNP Paribas, that concludes this conference.

Thank you for joining us, and you may now disconnect your line. Thank you, team. Have a great day.

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