Adani Cement in FY26: Volume-led growth, but cost shocks force a reset

Adani Cement, anchored by Ambuja Cements with subsidiaries and acquisitions including ACC and Orient Cement, closed FY26 with strong volume growth but a clear margin squeeze in the March quarter. On a consolidated basis, cement volumes rose to 73.7 million tonnes in FY26, up 16% year on year, while revenue from operations increased 15% to INR 40,656 crore. Reported EBITDA for the year was INR 6,539 crore, translating to an EBITDA margin of 16.1% and EBITDA per tonne of INR 887.

The March quarter, however, showed the stress points. Q4 consolidated volumes were 19.9 million tonnes, up 10% YoY, but EBITDA per tonne fell to INR 735 from INR 1,028 a year ago. Management attributed the quarter’s performance to a combination of fuel cost inflation linked to the West Asia conflict, packaging supply constraints, and labour migration disruptions due to state elections.

FY26 performance: growth in tonnes, volatility in margins

FY26 benefited from higher sales volumes and consolidation of acquired assets, but quarterly profitability swung sharply as energy and logistics costs rose. The company also highlighted that FY25 included certain one-time incomes, making like-to-like comparisons more complex.

A key external shock discussed across the presentation and call was the surge in imported petcoke prices. The deck cited imported petcoke CFR rising from USD 119 per tonne in Jan 2026 to USD 160 per tonne in Apr 2026, a 35% increase in the quarter. While management highlighted mitigation measures such as fuel mix optimization, higher renewable power usage, and logistics optimization via rail and sea, the spike still compressed margins.

Financial snapshot (consolidated)

Cost drivers and what management is trying to fix

The company’s Q4 cost bridge underscored pressure across multiple line items. Raw material cost per tonne declined versus last year, but power and fuel costs remained elevated. Freight and forwarding costs increased, which management linked to servicing longer lead markets due to planned shutdowns and constraints. Other expenses rose due to higher packing material costs and other operational items, with management stating that some of these were linked to the disruptions in March.

On the earnings call, management provided more granular commentary on why costs did not fall as earlier aspirations suggested. It pointed to slower-than-expected improvements at acquired assets, higher repairs and maintenance needs, and a meaningful step-up in branding and trade push. Management also acknowledged that some efficiency capex initiatives had been delayed by three to six months.

The cost narrative was framed around a peak and a reduction path. Management described Q4 costs at around INR 4,500 per tonne and characterised this as a peak level, barring minor fluctuations. From that base, it guided to a reduction of about INR 250 per tonne in FY27 on an average basis, with the CEO stating a FY27 target around INR 4,250 per tonne.

Capacity, utilisation, and the shift to discipline

The presentation laid out an expansion roadmap with a near-term commissioning wave. Cement capacity as of March 31, 2026 was stated at 109 MTPA. Projects expected to be commissioned in H1 FY27 include multiple grinding units, and the company expects total capacity to rise to around 119 MTPA by end of FY27.

At the same time, management emphasised that focus is shifting from rapid additions to stabilising and improving utilisation. Consolidated utilisation was stated at 77% in Q4 FY26, with a longer-term target of 85%. Sanghi’s utilisation improved from 43% in Q4 FY25 to 57% in Q4 FY26, but management acknowledged further work is required at Sanghi and Penna.

In the transcript, management guided FY27 utilisation expectations by asset: Orient at full capacity, Sanghi at 65% to 70%, Penna at 55% to 60%, and the core Ambuja and ACC assets at 75% to 80%. This set of assumptions underpins the company’s FY27 volume guidance.

The call also highlighted a reset in expansion ambition timelines. Karan Adani stated that while the longer-term target has not been abandoned, the timeline is being pushed out. The stated reason was under-delivery on earlier commitments and a need to course-correct execution and capex discipline.

Consolidation update: One Cement Platform

The company reiterated progress on its consolidation roadmap. Sanghi’s amalgamation into Ambuja became effective March 12, 2026 and Penna’s merger was made effective April 10, 2026. The proposed amalgamation of ACC and Orient into Ambuja remains under process, with merger schemes filed and awaiting SEBI no-objection certificates, and completion expected over FY27 subject to approvals.

This consolidation theme also connects to how the company is positioning itself commercially. Trade cement share for Ambuja and ACC was highlighted at 74% (Q4 FY26), with premium products at 36% of trade. Management indicated it intends to sustain the premium share at around 36% and continue pushing trade-led volumes.

Cash, capex, and balance sheet positioning

Ambuja’s consolidated cash and cash equivalents declined sharply through FY26. The deck showed cash falling from INR 10,125 crore at April 1, 2025 to INR 1,770 crore at March 31, 2026. The company attributed a large part of the movement to investing outflows and highlighted the Orient acquisition cost of about INR 5,910 crore.

Management also provided capex guidance. FY26 capex was stated at about INR 7,500 crore. For FY27, management guided to a moderated capex range of about INR 6,000 to INR 6,500 crore, with an emphasis on completing projects already under execution and focusing on return thresholds. Karan Adani said the project IRR threshold is 18%.

Despite lower cash balances, the company emphasized balance sheet strength, stating it remains debt free with net worth of INR 71,846 crore and credit ratings of AAA (Stable) and A1+.

Takeaways for investors

FY26 reinforced Adani Cement’s scale and volume momentum, with growth ahead of the industry. But Q4 also exposed the sensitivity of margins to energy shocks and the internal work still required to lift acquired assets to the group’s target performance standards.

The FY27 message is clear: stabilise new capacity, improve utilisation, and take costs down from the peak levels experienced in Q4. If execution improves and the cost levers described by management play out, the year could mark a transition from integration-driven growth to more predictable operating performance.