Detailed Rationale

Crisil Ratings has reaffirmed its 'Crisil AAA/Stable/Crisil A1+' ratings on the bank facilities and short-term debt programme of Ambuja Cements Limited (Ambuja Cements; part of the Adani group).

 

The ratings factor in the strong business risk profile by virtue of Ambuja Cements and ACC Ltd (ACC; ‘Crisil AAA/Stable/Crisil A1+’) together being the second-largest cement group in India. The group had an installed cement capacity of 88.9 million tonnes per annum (mtpa) as on March 31, 2025. The strong presence of the Adani group in coal, power and logistics verticals will result in structural reduction in cost of production of cement business owing to synergy benefits which shall further strengthen the business risk profile over the medium term. The financial risk profile of the company will remain strong over the medium term supported by a debt-free balance sheet and robust liquidity. The promoter holding company of the Adani group had raised ~$6.3 billion to fund the acquisition of shares from Holcim Ltd through a mix of debt, equity and shareholder loans without any commitment from Ambuja Cements and ACC to meet principal or interest obligation. At present $4.2 billion debt is outstanding as on March 31, 2025, at the holding company level.

 

The group has sizeable capex plans to the tune of ~RS 9,000-10,000 crore annually to achieve the intended target of reaching consolidated cement capacity of 140 MTPA by 2028, through a mix of greenfield and brownfield expansions as well as acquisitions. Additionally, the outflow in current fiscal would also include payout towards the completion of acquisition of Orient Cement Ltd. The sizeable capex and acquisitions undertaken during the previous fiscal was supported by the equity infusion of Rs 15,000 crores by the promoters in March-April 2024 towards pending warrants, which boosted the liquid surplus. The company is also focusing on extracting synergies between itself, its subsidiaries as well as within the larger Adani group to reduce cost of production and generate healthy cash accruals to support these capex plans. While the extent of improvement in cost of production from higher synergies remains a monitorable, Crisil Ratings believes that the organic capex plans would be largely funded via internal accruals and the robust liquid surplus and hence, does not expect material leveraging of the balance sheet.

 

For fiscal 2025, the consolidated sales volume increased to 65.2 MTPA (vs 59.2 MTPA in fiscal 2024). Profitability as reflected by earnings before interest, tax, depreciation and amortization (EBITDA) per ton moderated to Rs 916 in fiscal 2025 (against Rs 1,081 in fiscal 2024), majorly due to impact of subdued cement realisations during the period. Profitability in fiscal 2025 was supported by higher government grants of Rs 1,347 crore (against Rs 352 crore in fiscal 2024).With expected recovery in demand and price hikes, ramp up in utilisation of recently acquired units, investments in renewable power, optimisation of logistics footprint, and synergies between Ambuja Cements, its subsidiaries and other group companies, the operating performance is expected to improve going forward.

 

The ratings continue to reflect the strong pan-India market position of Ambuja Cements and ACC combined, its robust operating efficiency and strong financial risk profile, driven by healthy cash flow and the debt-free position. These strengths are partially offset by susceptibility to the commoditised and cyclical nature of the cement industry. Substantial leveraging of the balance sheet or change in financial policies, which could weaken the financial risk profile, will be a key rating sensitivity factor.

Analytical Approach

Crisil Ratings has combined the business and financial risk profiles of Ambuja Cements, ACC and all other subsidiaries/JVs/associates. This is because all these companies have a common line of business and management. They operate as one unit symbiotically and optimise each other's plant capacities and spare inventories, and thus, benefit from operational, managerial and financial synergies.

 

Debt in ultimate holding company/companies of ACC and of Ambuja Cements has not been consolidated as it is non-recourse to these entities and will likely be serviced via cash flow streams at the promoter level not limited to dividends of either company.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description

Strengths:

Strong market position: ACC and Ambuja Cements (with their subsidiaries) together had an installed capacity of 88.9 mtpa as on March 31, 2025 (excluding Orient Cement Ltd), with a pan-India presence making it the second largest player in the cement industry. The companies jointly hold 14-15% capacity share in the domestic market. They have 24 integrated units, 22 grinding and blending units, 102 ready-mix concrete plants and more than 110,000 plus channel partners with nation-wide presence. These factors shield the operations from price volatility in regional markets and demand-supply imbalance.

 

Healthy operating efficiencies: Consolidated operating margin has been healthy, aided by high proportion of blended cement (around 78%), low clinker factor (~67%) and 28% energy consumed from renewable and green sources during fiscal 2025. The company has announced investments of Rs 6,000 crores to add 1000 MW of renewable capacity by end of fiscal 2026 to further augment the power mix towards low-cost WHRS/wind/solar projects, so as to sustain its superior operating margin over the medium term. Out of this target, it has already installed 299 MW of wind and solar projects combined as on date.

 

For fiscal 2024, consolidated EBITDA margin moderated to 17.0% with adjusted ROCE of around 11.9% (against 19.2% and ~14.9% respectively for fiscal 2024).

Strong financial risk profile: The company has a networth of ~Rs. 54,800 crore as of March 31, 2025 (enhanced with equity infusion of Rs 15,000 crores received against conversion of share warrants in March-April 2024; this is in addition to Rs 5000 crore received while issuance of the warrants in October 2022) and liquid surplus of ~Rs 10,125 crore as on March 31, 2025, lend strength to the balance sheet at a consolidated level. Overall gearing too remained healthy. Strong cash flow and debt free position further translate into robust debt protection metrics.

 

The ultimate holding companies of cement business (i.e. of ACC and Ambuja Cements) have outstanding debt of ~$4.2 billion with bullet repayments and semi-annual interest servicing. The management has articulated to service this debt from the existing liquidity and cash flows generated at the group level from interest and dividend income, along with refinancing of the principal amount. Further, the cash balance and cash accrual of ACC and Ambuja Cements will be primarily utilised towards their growth capex. Therefore, the financial risk profile is expected to remain strong. However, any substantial increase in dividend or support to group/holding company from cash flows of ACC and Ambuja Cements may potentially weaken the credit risk profile of these companies and thus, would be a key monitorable.

 

The company at a consolidated level is likely to incur a large capex of nearly Rs 38,000 crore (including payout towards Orient Cement Ltd acquisition) over fiscals 2026 to 2028, towards capacity addition, captive power plants, plant maintenance and other infrastructure development. These are likely to be majorly funded through internal accrual and existing liquidity, with minimal reliance on debt. Proceeds from the equity infusion by the promoters and healthy cash accruals of the company will ensure negligible reliance on debt to fund capex.

 

Weakness:

Susceptibility to volatility in input cost and realisations, and cyclicality in the cement industry: Capacity addition in the cement industry tends to be sporadic because of the long gestation period for setting up a facility and numerous players adding capacity during the peak of a cycle. This led to unfavourable price cycles for the sector in the past. Moreover, profitability remains exposed to volatility in input prices, including raw material, power, fuel and freight.

Liquidity: Superior

At Ambuja Cements on a consolidated level, cash and equivalent stood at more than Rs 10,000 crore as on March 31, 2025. Unutilised bank limit and healthy cash accrual will suffice to meet working capital requirement.

 

At a consolidated level, cash accrual of over Rs 7000 crore is expected per fiscal over the medium term. Accordingly, the cash accrual and surplus liquidity would comfortably cover the capex requirement.

Outlook: Stable

Crisil Ratings believes Ambuja Cements will maintain its strong financial risk profile over the medium term, supported by healthy cash accrual and low reliance on debt.

Rating sensitivity factors

Downward factors

• Sustained decline in operating profitability impacting the cash accruals
• Higher-than-expected debt-funded capex or acquisition, resulting in net debt to Ebitda ratio increasing to more than 1.5 times on a sustained basis
• Any substantial increase in dividends or support to group/holding company, which weakens the financial risk profile

About the Company

Ambuja Cements is one of India’s leading cement manufacturers with an installed capacity of 88.9 mtpa at a consolidated level as of March 2025 (31.55 mtpa at a standalone level). In January 2006, Holcim acquired a 14.8% stake in Ambuja Cements. Following an open offer in April 2006, Holcim assumed management control of the company. Post restructuring between ACC and Ambuja Cements, effective from August 12, 2016, ACC became a subsidiary of Ambuja Cements.

 

ACC is the oldest cement company in India, with standalone installed capacity of 38.5 MTPA as of March 2025. The company also manufactures ready-mix concrete and has over 102 plants across the country.

 

On May 15, 2022, the Adani group and Holcim Ltd executed a share purchase agreement for purchase of the latter’s entire stake in Ambuja Cements and ACC Ltd for a total consideration of Rs 50,181 crore (~$6.3 billion). This enabled entry of the Adani group into the cement business at second position in India, with a significant scale and strong brands. Subsequently, the board was reconstituted in September 2022 upon completion of the transaction.

Key Financial Indicators* – Ambuja Cements (consolidated)

Particulars	Unit	2025	2024
Revenue	Rs crore	35,045	33,160
Profit after tax (PAT)	Rs crore	5,158	4,735
PAT margin	%	14.7	14.3
Adjusted debt / adjusted networth	Times	0.00	0.00
Interest coverage	Times	39.9	27.5

*as per Crisil Ratings analytical adjustment

Any other information: Not Applicable

Annexure – List of entities consolidated

Names of entities consolidated	Extent of consolidation	Rationale for consolidation
ACC Ltd	Full	Subsidiary
M.G.T Cements Pvt Ltd	Full
Chemical Limes Mundwa Pvt Ltd	Full
OneIndia BSC Pvt Ltd	Full
ACC Mineral Resources Ltd *	Full
Bulk Cement Corporation (India) Ltd*	Full
Lucky Minmat Ltd*	Full
Singhania Minerals Pvt Ltd*	Full
Sanghi Industries Ltd	Full
Ambuja Shipping Services Limited	Full
Foxworth Resources And Minerals Limited	Full
LOTIS IFSC Private Limited	Full
Ambuja Concrete North Private Limited	Full
Ambuja Concrete West Private Limited	Full
ACC Concrete South Limited*	Full
ACC Concrete West Limited*	Full
Asian Concretes and Cements Private Limited (w.e.f. January 8, 2024)*	Full
Asian Fine Cements Private Limited (w.e.f. January 8, 2024)*	Full
Penna Cement Industries Limited (w.e.f August 16, 2024)	Full
Counto Microfine Products Pvt Ltd^	Equity method	JV/Associate
Aakaash Manufacturing Company Pvt Ltd ^	Equity method	JV/Associate
Alcon Cement Company Pvt Ltd ^	Equity method	JV/Associate
Asian Concretes and Cements Pvt Ltd ^ (up to 7th Jan 2024)	Equity method	JV/Associate

*Subsidiaries of ACC Ltd

^JV / Associates of ACC Ltd