Ambuja Cements Sets New Records with Impressive Growth in Q2 FY’25
Newzdaddy Business Updates
Synopsis of the Article
- Ambuja Cements achieved a 9% YoY volume growth in Q2 FY’25, reaching 14.2 million tonnes, its highest Q2 volume in five years.
- The highest quarterly revenue was recorded at ₹7,516 crore, marking a 1% YoY increase.
- Operating EBITDA stood at ₹1,111 crore with an EBITDA margin of 14.8%, the highest among competitors.
- Cash and cash equivalents totaled ₹10,135 crore, with a net worth increase to ₹59,916 crore.
- Announced acquisition of a 46.8% share in Orient Cements at an equity value of ₹8,100 crore.
- First cement company worldwide to join the Alliance for Industry Decarbonization (AFID).
- Positioned to achieve 100+ MTPA capacity by March 2025, driven by organic and inorganic growth.
- Recognized among ‘Iconic Brands of India 2024’ by The Economic Times.
- Reduction in operating costs by ₹184 PMT (4% YoY).
- Earnings Per Share (EPS) for the quarter at ₹1.85.
- Initiatives in ESG, renewable energy, and sustainability are prioritized for long-term value creation.
Volume and Revenue Growth at Record Highs
In the second quarter (Q2) of FY’25, Ambuja Cements, a leading name in India’s cement industry and part of the Adani Group, reported exceptional performance marked by significant volume and revenue growth. Ambuja recorded a 9% year-on-year (YoY) increase in cement and clinker volumes, reaching 14.2 million tonnes (Mn T), its highest Q2 volume in five years. This growth underscores Ambuja’s ongoing strategic efforts to increase capacity and meet rising demands. The company also achieved its highest quarterly revenue of ₹7,516 crore, marking a 1% YoY increase, a testament to its strong operational capabilities and market presence.
Strong EBITDA Margin Among Peers
Ambuja reported an impressive EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of ₹1,111 crore in Q2, resulting in an EBITDA margin of 14.8%, the highest among its competitors. This achievement reflects the company’s focus on operational efficiency and cost control. Efforts in digitization, innovation, and customer-centric initiatives have strengthened Ambuja’s positioning in the market, ensuring a competitive edge in India’s cement industry.
Financial Strength and Share Acquisition
Ambuja’s financial resilience is underscored by its strong cash and cash equivalents position at ₹10,135 crore. Additionally, the company’s net worth grew to ₹59,916 crore. Notably, Ambuja signed a binding agreement to acquire a 46.8% share in Orient Cements, valued at ₹8,100 crore. This acquisition marks a strategic step in Ambuja’s growth and enhances its capabilities to serve new geographies.
Sustainability Leadership with Global Recognition
Ambuja has taken remarkable steps in its commitment to sustainability. It recently became the world’s first cement company to join the Alliance for Industry Decarbonization (AFID), an initiative led by the International Renewable Energy Agency (IRENA). This membership positions Ambuja at the forefront of environmental responsibility within the cement industry, reinforcing its commitment to carbon reduction. Ambuja’s reputation was further solidified when it was recognized as one of India’s ‘Iconic Brands of 2024’ by The Economic Times.
Cost Efficiency and Financial Performance
Demonstrating improved cost leadership, Ambuja reduced its operating cost to ₹4,497 PMT, down by ₹184 PMT or 4% YoY. The company also reported an EPS (Earnings Per Share) of ₹1.85 for the quarter, reflecting the effective management of expenses alongside revenue growth. With consolidated business-level working capital down to 33 days, Ambuja has maintained operational agility in managing inventory and receivables, ensuring smooth business continuity.
Operational Highlights Reflecting Efficiency Gains
Energy and Resource Optimization
Ambuja has successfully implemented measures to reduce energy and resource consumption across its production lines. The company reduced kiln fuel costs by 13% on a consolidated basis, from ₹1.82 to ₹1.59 per ’000 kCal. This achievement was supported by increased reliance on imported Petcoke and E-auction coal. Additionally, Ambuja’s thermal energy consumption improved by 3 kCal per kg of clinker, now standing at 758 kCal, aligning with its sustainable energy goals.
Waste Heat Recovery and Alternative Fuel Initiatives
Ambuja has increased the proportion of power from waste heat recovery systems (WHRS) by 3.2 percentage points YoY, now accounting for 15.1% of its total power consumption. Furthermore, the company’s use of alternative fuel resources in kilns increased to 9.5%, marking significant progress in reducing dependence on traditional fuel sources.
Financial Performance for Q2 and H1 FY’25
For Q2 FY’25, consolidated revenue grew to ₹7,516 crore, driven by a strong trade sales volume and premium product sales making up 26% of trade sales, a 3.3 percentage point increase YoY. In H1 FY’25, Ambuja’s consolidated revenue reached ₹15,828 crore, while standalone revenue was ₹8,729 crore, reflecting robust business parameters and the positive impacts of enhanced operational efficiency.
Operating and Other Income Details
The company’s operating EBITDA margin of 14.8% for Q2 was reinforced by its prudent operational choices, positioning it as a leader in the industry. Other income stood at ₹374 crore in Q2, with profit before tax at ₹713 crore. Net profit after tax for Q2 was ₹473 crore, reflecting consistent profitability even amidst evolving market demands.
ESG Commitments and Digital Transformation
Environmental, Social, and Governance (ESG) Achievements
Ambuja’s ESG initiatives have garnered industry recognition, including the prestigious Golden Peacock Award for excellence in ESG practices. Both Ambuja and its sister company, ACC, have committed to achieving net-zero emissions by 2050. Ambuja also recently became a signatory to the World Economic Forum’s transitioning industrial cluster initiative, further emphasizing its commitment to sustainable development.
Community Initiatives and Social Impact
Ambuja and ACC have positively impacted over 4.72 million lives through contributions to healthcare, education, sustainable livelihoods, and job creation. Ambuja’s “#Giants Together” campaign highlights inspiring stories of loyal contractors across India, celebrating those who are driving positive change in their communities.
Digital Advancements for Operational Efficiency
Modernizing Sales and Reward Platforms
Ambuja’s digital journey includes the “Adani Cement Connect” digital sales platform, which empowers dealers to track orders, invoices, and outstanding payments. Additionally, the “Adani Rewards Connect” platform allows contractors, dealers, and retailers to monitor and redeem their loyalty rewards. These tools not only enhance user experience but also strengthen the overall supply chain.
Automation and Network Modernization
In its plants, Ambuja has adopted advanced automation systems, from automated weighbridge operations to vehicle tracking and intelligent order allocation. This modernization has reduced processing time and accelerated order fulfillment, enabling Ambuja to respond swiftly to market needs.
Future Outlook
With India’s strong infrastructure demand and government investments in urban housing and commercial projects, Ambuja anticipates robust cement demand in H2 FY’25. Initiatives such as the PMAY Urban Housing 2.0 and ongoing investments in transportation infrastructure are expected to drive cement sector growth. Ambuja projects demand growth of 4-5% for FY’25, aligning its production and growth strategy with the nation’s economic goals.
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