Ambuja margin slips as costs rise despite broadly flat year-on-year revenue
Operating margin fell 2.91 percentage points QoQ, while the year-on-year profit comparison was distorted by a large tax credit in Q2FY26.
Filed 29 Oct 2026, 14:24 IST · Ambuja Cements Ltd (AMBUJACEM)
Key takeaways
- Consolidated operating margin fell 2.91 percentage points sequentially to 13.82% as expenses rose 0.19% while revenue declined 3.19%.
- Consolidated net profit declined 64.24% QoQ to Rs 236 cr, with other income moving from Rs 150 cr to a loss of Rs 22 cr and interest rising 29.82%.
- The 13.82% operating margin was 0.81 percentage points below the 14.63% median for 39 reported Commodities peers.
Price around the results
Revenue was flat year-on-year, but quarterly momentum weakened
Consolidated revenue was almost unchanged year-on-year, rising 0.25%, but declined 3.19% sequentially. Expenses rose 6.91% year-on-year and 0.19% QoQ, leaving operating profit down 27.82% and 20.01%, respectively. Management said 4.6 MTPA of new capacity began commercial production in Q2FY27 and that 14 projects are planned to add 29.7 MTPA.
Higher costs drove the margin decline
Costs grew faster than revenue in both comparisons, reducing operating margin by 5.37 percentage points year-on-year and 2.91 percentage points QoQ. Management said escalated geopolitical issues had an approximate cost impact of Rs 228 per tonne. The company told investors it is targeting cement costs of Rs 4,250 per tonne in FY27 and Rs 4,000 per tonne in FY28.
Profit quality was weaker than the headline EPS comparison suggests
Profit before tax fell 64.42% year-on-year and 64.86% QoQ, while other income contributed -7.38% of pre-tax profit in the current quarter. The year-on-year net profit comparison is also affected by a tax credit of Rs 1,464.75 cr in Q2FY26; the current tax rate was 20.81%, versus -174.89% then. Sequentially, interest expense rose 29.82% and depreciation rose 5.16%, adding to the pressure below operating profit.
Margin remains below the peer median after a volatile multi-quarter trend
Operating margin moved from 19.06% in Q1FY26 and 19.19% in Q2FY26 to 13.17% in Q3FY26, 13.41% in Q4FY26, 16.73% in Q1FY27 and 13.82% now. The current margin is below the 14.63% median reported by 39 Commodities peers, placing Ambuja 18th from the bottom on this measure. Management said Bathinda and Jodhpur Penna are scheduled to ramp up 3.2 MTPA in H2FY27.
Expansion and integration remain the main management priorities
Management said firmed-up expansion is intended to take cement capacity to 149 MTPA, with debottlenecking targeted to raise it further to 155 MTPA. The company said a further 2.4 MTPA addition is scheduled for FY28 and that premium cement sales are targeted at 40% of trade sales. Management also said the One Cement Platform merger has moved to the final NCLT sanction stage.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹9,197 cr | ₹9,500 cr | -3.19% | +0.25% |
| Other income | ₹-22 cr | ₹150 cr | — | — |
| Expenses | ₹7,926 cr | ₹7,911 cr | +0.19% | +6.91% |
| Operating profit | ₹1,271 cr | ₹1,589 cr | -20.01% | -27.82% |
| Operating margin (%) | 13.82% | 16.73% | — | — |
| Interest | ₹74 cr | ₹57 cr | +29.82% | -3.67% |
| Depreciation | ₹877 cr | ₹834 cr | +5.16% | -0.92% |
| Profit before tax | ₹298 cr | ₹848 cr | -64.86% | -64.42% |
| Tax | ₹62 cr | ₹188 cr | -67.02% | — |
| Net profit | ₹236 cr | ₹660 cr | -64.24% | -89.75% |
| EPS (₹) | ₹0.78 | ₹2.32 | -66.38% | -89.09% |
Operating margin of 13.82% compares with a Commodities sector median of 14.63% across 39 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- The company plans to increase cement capacity to 149 MTPA through firmed-up expansion and scale it further to 155 MTPA through debottlenecking.
- The company is targeting cement cost of ₹4,250 per tonne in FY27 and ₹4,000 per tonne in FY28.
- The company is targeting premium cement sales at 40% of trade sales.
Expansion
- Commercial production commenced in Q2 FY27 for 4.6 MTPA of capacity additions.
- A 2.4 MTPA capacity addition is scheduled to be commissioned in FY28.
- The company has 14 projects planned to add 29.7 MTPA of cement capacity.
- Bathinda and Jodhpur Penna are scheduled to ramp up 3.2 MTPA in H2 FY27.
New initiatives
- The merger process has advanced to the final NCLT sanction stage for the One Cement Platform.
- The proposed amalgamations are intended to simplify the corporate structure, unlock operating synergies and support long-term stakeholder value.
- The company is implementing unified master data and geo-intelligent mapping as a digitalisation initiative.
- The company is developing a geo-coded single source of truth to optimise pricing and freight.
- The company is implementing AI-driven invoice-to-payment automation.
Problems & risks
- Escalated geopolitical issues had an approximate cost impact of ₹228 per tonne.
- The company says the West Asia conflict is impacting the Indian economy.
What to watch
- Whether operating margin recovers from 13.82% after the 2.91-percentage-point QoQ decline.
- Progress on the planned 3.2 MTPA ramp-up at Bathinda and Jodhpur Penna in H2FY27.
- Whether cement costs move toward management's Rs 4,250-per-tonne FY27 target and premium cement sales toward 40% of trade sales.