Ambuja Cements Adjusts Expansion Plans Amid Rising Costs and Execution Challenges

Ambuja Cements Resets Expansion Strategy Amid Cost Pressures

Mumbai: Ambuja Cements Ltd, India's second-largest cement maker by capacity, has reset its expansion strategy after falling short of its own expectations, with promoter Karan Adani signalling a sharper focus on cost discipline and execution.

The company has adopted a more cautious approach to capital allocation, effectively deferring parts of its earlier expansion timeline and prioritizing stabilization of existing assets. Ambuja Cements has also seen a renewed emphasis on building the right team and execution capability, an area where the company admits it underestimated the challenge post-acquisition.

Leadership changes have accompanied the shift, with Ajay Kapur, managing director of Ambuja Cements, superannuating effective January 31, 2026, and being succeeded by Vinod Bahety. Bahety pointed out that when Ambuja and ACC were acquired in September 2022, "at that time there was no team, so it took us time to build up that team as well."

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Ambuja Cements missed Street expectations on revenue in FY26, as elevated costs, including escalation linked to the West Asia conflict, goods and services tax (GST)-related changes and state elections, dampened demand. The company reported consolidated revenue from operations of ₹40,446.04 crore for FY26, up 19% year-on-year, but below the consensus estimate of ₹41,361.71 crore of 40 analysts polled by Bloomberg.

Profit attributable to owners rose 10% to ₹4,728.18 crore for fiscal 2026, as per exchange filings. Total expenses increased 19% to ₹37,910.76 crore in FY26 compared to FY25.

Operating Ebitda rose to ₹6,539 crore in FY26 from ₹5,971 crore in FY25, though margins declined to 16.1% from 16.9%. The company produced 73.7 million tonnes of cement in FY26.

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"We have seen some disruptions in March given the West Asia war…higher fuel cost and higher packing costs," said Bahety. "On the cost front, we have seen a bit of a higher cost compared to our own expectations and therefore some disappointment."

Fuel costs rose up to 20% in FY26 to ₹10,023.78 crore, while freight costs increased 14% to ₹9,497.28 crore. For the March quarter, the cement maker reported a 10% rise in revenue from operations to ₹10,891.68 crore and a 78% jump in net profit to ₹1,830.15 crore, aided by tax gains.

Looking ahead, Bahety expects "inflationary pressure and weak monsoons" to weigh on demand, which "is expected to remain a little soft." He added that as demand weakens, pricing pressure intensifies, and despite rising costs, the industry continues to face constraints in passing on price increases.