ACC's Q1 profit sinks 61% as fuel costs, maintenance shutdowns squeeze margins; stock ends higher

ACC Ltd reported a sharp decline in its June quarter earnings on Friday as higher imported fuel costs, planned maintenance shutdowns at key plants and increased manufacturing volumes for parent Ambuja Cements eroded profitability, even as the company expanded its green energy footprint and advanced capacity additions.

The Adani Group-owned cement maker posted a 60.9% year-on-year decline in consolidated net profit to ₹147 crore for the quarter ended June 30, compared with ₹376 crore a year earlier. Revenue from operations fell 8.2% to ₹5,808 crore from ₹6,328 crore, while operating EBITDA dropped 41.3% to ₹457 crore. EBITDA margin contracted sharply to 7.9% from 12.3% a year ago.

Despite the weak earnings, ACC shares closed 0.61% higher at ₹1,342 on the NSE shortly after the results were announced.

More than just the West Asia conflict

While the company acknowledged that rising prices of imported petcoke and thermal coal, along with elevated freight costs triggered by geopolitical tensions in West Asia, hurt costs during the quarter, management indicated that the earnings weakness stemmed from multiple operational factors rather than fuel inflation alone.

"We have commenced FY'27 with a resilient performance, driven by a higher share of trade volumes and continued premiumization. During the quarter, profitability reflected the impact of planned maintenance of larger integrated units, higher MSA with parent Ambuja Cements, even as we continued to prioritize value-led growth and quality earnings," whole-time director and CEO Vinod Bahety said.

The company also cautioned that the impact of higher fuel costs could extend into the September quarter because of the industry's 60-90 day fuel inventory cycle, potentially weighing on profitability in the near term.

Although cement sales volumes declined to 10 million tonnes from 10.7 million tonnes a year ago, ACC increased its trade sales mix to 81% from 76% and premium products accounted for 44% of trade sales compared with 41% last year. Operational efficiency also improved, with green power usage rising to 31% from 26%, lower power costs and shorter lead distances. However, these gains were insufficient to offset the pressure from maintenance shutdowns, higher manufacturing service agreement (MSA) volumes with Ambuja and rising fuel costs.

Expansion, merger and green power push continue

Beyond earnings, ACC highlighted progress on several strategic initiatives.

The company said trial runs have commenced at its 2.4 million tonnes per annum (MTPA) Salai Banwa grinding unit in Uttar Pradesh, while the Kalamboli expansion is expected to add another 1 MTPA during FY27. It also reiterated that the proposed amalgamation with Ambuja Cements under the "One Cement Platform" has moved ahead after receiving SEBI's no-objection certificate, with the application now pending before the National Company Law Tribunal.

Separately, ACC's board approved the acquisition of a 26% stake in Amplus Andhra Power Pvt. Ltd. for about ₹5.3 crore, enabling the company to source renewable power under the captive consumption framework as it accelerates its clean energy strategy.

Looking ahead, the company said India's long-term cement demand outlook remains favourable, supported by infrastructure spending, urbanisation and housing demand, even as monsoon seasonality, geopolitical uncertainty and input cost volatility may weigh on the near-term operating environment.