- Net profit plunged 91% YoY to ₹204 cr, yet revenue jumped 20% to ₹10,181 cr.
- Normalized profit (PMT‑adjusted) surged 258% YoY to ₹378 cr, revealing a hidden earnings boost.
- PMT EBITDA rose 31% YoY to ₹718 cr, margin improved to 13.2% (+2.9 pp).
- Volume growth doubled the industry average, driven by premium‑trade cement sales.
- Debt‑free balance sheet with net worth of ₹69,854 cr; capex funded by robust cash flow.
- Capacity expanding to 115 MTPA by March 2026; new grinding unit already online.
- Management targeting cost of ₹3,650 per metric tonne by March 2028 through green power and logistics efficiencies.
You missed the warning sign in Ambuja Cements' earnings – and your portfolio may be paying for it.
Ambuja Cements, a flagship of the Adani Group, stunned the market with a staggering 91% year‑on‑year drop in consolidated net profit for Q3 FY26, falling to just ₹204 cr from ₹2,158 cr a year earlier. Yet a deeper look tells a different story: revenue surged 20% YoY, EBITDA margins widened, and normalized profit (adjusted for a one‑time bridge) rocketed 258% YoY. For the savvy investor, the headline loss is a distraction from a fundamentally stronger business poised for upside.
Why Ambuja Cements' Margin Surge Masks a Deeper Profit Gap
On the surface, a 91% profit plunge screams trouble. The reality is that a one‑off accounting bridge, disclosed in the investor deck, inflated the reported loss. When the bridge is stripped out, the adjusted net profit jumps to ₹378 cr—an increase of more than two‑and‑a‑half times versus the same quarter last year. This normalization highlights two critical dynamics:
- Operating leverage: Revenue grew 20% YoY to ₹10,181 cr while operating expenses rose at a slower pace, lifting the EBITDA margin to 13.2% (up 2.9 percentage points).
- Premium mix shift: The company’s focus on trade and premium cement delivered higher per‑tonne realizations, outpacing peers that remain tied to bulk, lower‑margin cement.
Investors who ignore the margin expansion risk overlooking a company that is building pricing power in a fragmented market.
Impact of Ambuja Cements' Volume Growth on the Indian Cement Landscape
Ambuja’s cement volume grew at twice the industry average in Q3 FY26. This outperformance stems from two strategic levers:
- Capacity utilization: With 109 MTPA currently online and a target of 115 MTPA by March 2026, the firm is squeezing more output from existing plants while the new Marwar grinding unit adds 2.4 MTPA of flexible capacity.
- Geographic focus: Expansion in high‑growth regions such as Warisaliganj (expected Q1 FY27) positions Ambuja to capture infrastructure‑driven demand in central and western India.
Competitors like UltraTech, ACC, and Dalmia are expanding capacity too, but many are still grappling with higher fuel costs and logistics bottlenecks. Ambuja’s superior logistics cost management—thanks to its dedicated rail and road network—provides a tangible cost advantage.
Historical Parallel: Cement Profit Swings and Market Reactions
India’s cement sector has seen profit volatility before. In FY18, the sector faced a 30% profit dip due to raw material price spikes, yet companies that doubled down on premium products (e.g., UltraTech) later posted a 45% profit surge in FY20 as demand for higher‑grade cement rebounded. The pattern repeats: short‑term earnings pain followed by a strong recovery when volume and mix improvements materialize.
Ambuja’s current trajectory mirrors that historical playbook—temporary earnings compression for long‑term market share gains.
Technical Definitions: PMT EBITDA, Net Worth, and Green Power Cost
PMT EBITDA: Earnings before interest, taxes, depreciation, and amortisation measured per metric tonne of cement sold. It normalises profitability across capacity changes.
Net Worth: The book value of shareholders’ equity; Ambuja reports a net worth of ₹69,854 cr, underscoring a solid capital base.
Green Power Cost: The expense of electricity sourced from renewable energy. Ambuja’s management is actively increasing the share of green power to curb overall power costs, a crucial lever for achieving the targeted cost of ₹3,650 per metric tonne by 2028.
Investor Playbook: Bull vs. Bear Cases on Ambuja Cements
Bull Case:
- Normalized profit shows a 258% YoY jump, indicating earnings resilience.
- Margin expansion to 13.2% validates pricing power and cost‑control initiatives.
- Debt‑free balance sheet provides flexibility for aggressive capex without diluting shareholders.
- Capacity expansion to 115 MTPA aligns with expected infrastructure stimulus and urbanisation trends.
- Management’s cost‑reduction blueprint (targeting ₹3,650/MT) could lift margins further, especially as green power costs decline.
Bear Case:
- Reported headline loss may erode investor confidence and trigger short‑term price volatility.
- Raw material price volatility (clinker, fuel) could compress margins if cost‑saving measures lag.
- Regulatory risks around environmental compliance could increase capital expenditures.
- Competitive pressure from peers expanding capacity could intensify price wars.
Overall, the bull narrative outweighs the bear concerns for investors with a medium‑ to long‑term horizon. Ambuja Cements appears to be at the cusp of a profitability inflection point—one that savvy investors can capture by positioning ahead of the next earnings cycle.