Ambuja Cements Q3 FY26 Results: PAT Plunges 90% Amid High Base Effect

Ambuja Cements, a prominent member of the Adani Portfolio, released its financial results for the third quarter of the fiscal year 2025-26. The company reported a significant 90.6 percent year-on-year decline in consolidated profit after tax, which stood at ₹203.70 crore for the quarter ended December 31, 2025. This sharp contraction in profitability occurred despite a robust growth in revenue and record-breaking sales volumes, highlighting a complex quarter influenced by high base effects and rising operational costs.

Understanding the High Base Effect and One-Offs

The primary reason for the steep decline in net profit is attributed to the high base set in the third quarter of the previous fiscal year. In Q3 FY25, Ambuja Cements recognized a substantial one-time income of ₹826 crore and benefited from significant tax credits, which had artificially inflated the profit figures for that period. When normalized to account for these exceptional items, the company noted that its profit after tax for Q3 FY26 actually demonstrated a 258 percent year-on-year jump, reaching ₹378 crore.

Record Sales Volumes Drive Revenue Growth

Operationally, the company achieved a milestone by reporting its highest-ever quarterly sales volume. Ambuja Cements dispatched 18.9 million tonnes of cement during the quarter, representing a 17 percent increase compared to the 16.2 million tonnes recorded in the same period last year. This volume growth was approximately twice the industry average, signaling strong market execution and successful penetration across trade and non-trade channels. Consequently, revenue from operations rose by 19.8 percent year-on-year to ₹10,180.52 crore.

Rising Operational Expenses Squeeze Margins

While the top-line performance was strong, the bottom line faced pressure from escalating expenses. Total expenses for the quarter increased by 18.7 percent to ₹9,941.46 crore. Power and fuel costs surged to ₹2,608.56 crore from ₹2,062.26 crore, while freight and forwarding expenses climbed to ₹2,362.70 crore. Additionally, depreciation and amortisation expenses saw a sharp rise to ₹959.03 crore. These factors led to a contraction in the EBITDA margin, which fell to 13.2 percent from 18.2 percent in the year-ago quarter.

Segment Performance: Cement and Ready-Mix Concrete

Cement remained the dominant contributor to the company's portfolio, with segment revenue reaching ₹9,814.79 crore in Q3 FY26. This was a marginal increase from the ₹9,092.15 crore reported in the previous year. The ready-mix concrete segment showed more aggressive growth, with revenue rising to ₹500.04 crore from ₹350.49 crore. The company's focus on premium cement products also paid off, with premium variants accounting for 35 percent of trade sales, supporting better realizations than many industry peers.

Financial Summary and Operational Metrics

The following table summarizes the key financial performance indicators for Ambuja Cements for the quarter ended December 31, 2025.

Strategic Amalgamation and the One Cement Platform

A defining development during the quarter was the board's approval for the merger of ACC Limited and Orient Cement into Ambuja Cements. This move is designed to create a unified "One Cement Platform" under the Adani Group. The amalgamation is expected to simplify the corporate structure, remove management complexities, and enhance operational efficiencies. Analysts view this consolidation favorably, as it streamlines reporting and integrates the group's cement assets into a pan-India powerhouse.

Capacity Expansion and Infrastructure Focus

Ambuja Cements continues to aggressively expand its production footprint. With the successful commissioning of the 2.4 MTPA Marwar Grinding Unit, the company's total cement capacity has reached 109 MTPA. The management has set a clear target to achieve a capacity of 115 MTPA by March 2026. This expansion aligns with the government's ongoing infrastructure programs, such as Bharatmala and Sagarmala, which are expected to sustain high cement demand in the coming years.

Market Reaction and Analyst Perspectives

The stock market reacted negatively to the sharp drop in reported profit. Shares of Ambuja Cements fell by approximately 4.8 percent to close at ₹510.20 on the BSE following the announcement. Despite the immediate price correction, some brokerages remain optimistic. Dolat Capital upgraded the stock to a 'Buy' rating with a target price of ₹617, citing favorable valuations after the correction and strong long-term growth prospects driven by volume expansion and the upcoming merger benefits.

Cost Management Blueprint for 2028

To address the pressure on margins, the management has outlined a comprehensive cost-reduction blueprint. The company aims to achieve a targeted cost of ₹3,650 per metric tonne by March 2028. Key initiatives include increasing the share of green power, improving fuel efficiency, and optimizing logistics through better network utilization. The company also plans to enhance its Waste Heat Recovery Systems and Alternative Fuels usage to mitigate the impact of rising traditional fuel prices.

Market Impact and Industry Trends

The cement sector in India is currently experiencing a period of consolidation and capacity building. While Ambuja Cements reported a profit decline, its volume growth at twice the industry average suggests a gain in market share. The broader industry expects a demand growth of 7 to 8 percent for the full fiscal year, supported by a recovery in rural construction and steady urban housing demand. Ambuja's debt-free balance sheet and healthy cash flows provide it with the financial flexibility to navigate this competitive landscape.

Conclusion and Future Outlook

Ambuja Cements' Q3 FY26 results present a narrative of strong operational growth masked by technical financial adjustments. While the reported profit figures were impacted by the absence of previous year's one-offs, the underlying business remains robust with record volumes and increasing market leadership. As the company moves toward the integration of ACC and Orient Cement, the focus will remain on cost optimization and capacity reaching 140 MTPA by FY28. Investors will likely monitor the progress of the merger and the company's ability to stabilize margins in a high-cost environment.