India: Adani Cement’s sales decline 7% y-o-y in Q1FY’27; expansion remains on track

• Production cost drops on lower clinker consumption, operational efficiency
• Sales mix improves as share of trade sales, premium products increases

Adani Cement, comprising Ambuja Cements, ACC, Orient Cement and Sanghi Industries, delivered a stable operational performance in Q1FY’27 despite lower cement sales. The company focused on improving profitability by increasing trade sales, expanding premium product offerings, and reducing operating costs.

Although higher imported fuel prices continued to pressure production costs, ongoing cost optimisation initiatives and capacity expansion supported overall operating performance. The company remains on track to increase its installed cement capacity to 119 mnt/year by the end of FY’27.

Infrastructure demand supports cement consumption
India’s cement demand remained healthy during Q1FY’27, supported by government infrastructure spending, urban housing projects and industrial construction. Construction activity improved after temporary disruptions caused by state elections, while delayed monsoon conditions also supported cement dispatches in several regions.

The company expects cement demand to remain healthy during the rest of FY’27, driven by infrastructure development, affordable housing, and private sector investments.

Sales mix improves despite lower volumes
Cement sales volume declined 7% y-o-y to 17.1 mnt from 18.4 mnt in Q1FY’26, as the company reduced lower-margin institutional sales and focused on higher-value trade and premium products.

The share of trade sales increased to 78% from 74% a year earlier, while premium products contributed 34% of trade dispatches. Blended cement accounted for around 85% of production, helping improve operational efficiency and reduce the clinker factor to 63.7% from 65.8%.

Production cost declined to INR 4,241/t from INR 4,324/t, supported by lower clinker consumption and better operating efficiency. EBITDA per tonne, however, declined to INR 931 from INR 1,069 in Q1FY’26 due to higher fuel and freight costs.

Regional markets remain stable
Northern and western India remained the company’s strongest markets during the quarter, supported by healthy demand and stable cement prices. The central region also reported better profitability due to a higher share of blended cement, while eastern operations remained stable.

In southern India, the company continued to strengthen its dealer network and improve product mix instead of pursuing low-margin sales.

The company also indicated that trade sales increased by around 8% y-o-y in July, supporting its confidence in achieving the targeted volume growth for FY’27.

Cost optimisation helps offset input cost pressure
Higher imported fuel prices, freight expenses, and geopolitical tensions in West Asia continued to increase production costs during the quarter. Despite these challenges, the company reduced net operating cost by INR 206/t q-o-q to INR 4,241/t through several efficiency measures.

The company stated that cost savings would have been more than INR 300/t if imported fuel inflation had not added nearly INR 110/t during the quarter.

The savings were achieved through:

• Better logistics planning, reducing lead distance by around 20 km and freight cost by nearly INR 10/t.
• Higher blended cement production and a lower clinker factor.
• Increased use of renewable energy.
• Better kiln efficiency and lower power consumption.
• Improved procurement and fixed-cost management.

The company expects to generate another INR 130-150/t of structural cost savings during the remainder of FY’27, helping offset future fuel cost volatility.

Renewable energy improves cost efficiency
The company continued to expand renewable energy to improve long-term cost competitiveness.

Key updates are as follows:

• Renewable energy capacity increased by 75 MW to 973 MW.
• Green power accounted for 34% of total electricity consumption.
• Waste Heat Recovery System (WHRS) capacity increased to 228 MW.
• Average power cost declined to INR 4.9/kWh from INR 5.9/kWh.

The company remains on track to meet around 60% of its power requirement through renewable energy by FY’28.

Capacity expansion continues
The company continued to execute its expansion projects as planned.

Installed cement capacity is expected to increase from 109 mnt/year to 119 mnt/year by the end of FY’27.

• New capacities at Dahej (1.2 mnt/year), Salai Banwa (2.4 mnt/year), Bathinda (1.2 mnt/year), and Jodhpur (2.0 mnt/year) have already been commissioned.
• Kalamboli (1.0 mnt/year) and Warisaliganj (2.4 mnt/year) are expected to begin commercial operations during Q2FY’27.
• The Maratha expansion project remains on schedule for commissioning next year.
• The company plans to continue adding 8-10 mnt/year of organic capacity over the medium term.

Acquired businesses continue to improve
The company also reported steady progress across its recently acquired businesses.

• Orient Cement is operating at around 87% capacity utilisation with limited additional investment requirements.
• Penna Cement continues to improve profitability through higher trade sales, renewable energy use, and operational efficiency.
• Around INR 600 crore is being invested at Sanghi Industries to expand jetty infrastructure, increase WHRS capacity, and improve coastal logistics, supporting lower transportation costs.

These initiatives are expected to improve plant utilisation, operating efficiency and profitability across the acquired businesses.

Outlook
The company is expected to maintain stable operational performance during the rest of FY’27, supported by healthy infrastructure demand, higher trade sales, premium product growth and continued cost optimisation. Ongoing capacity expansion, renewable energy investments and efficiency improvements are likely to support better plant utilisation and lower production costs as installed capacity increases to 119 mnt/year by the end of FY’27.