ACC: FY26 in the Rearview—Costs Peaked, Timeline Reset

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1. At a Glance

ACC sold 73.7 Mt of cement in FY26, a 16% jump year-on-year and management’s “highest-ever” annual volume. Revenue hit ₹25,962 Cr, up 18% from ₹21,920 Cr in FY25.

But the expansion was uneven. Acquired assets—Penna, Sanghi, Orient—underperformed: lower-than-expected utilization, surprise maintenance costs, and operational hiccups dragged margins tighter than expected.

Net profit fell 11% to ₹2,137 Cr from ₹2,402 Cr in FY25, despite the top-line muscle. EPS skid 11% to ₹113.80 from ₹127.92. The company explicitly flagged costs “peaked” at ₹4,500/tonne in Q4 and promised a ₹250/tonne reduction in FY27—a credibility test after missing prior guidance.

Balance sheet remains fortress-like: ₹429 Cr net debt against ₹25,512 Cr market cap, CRISIL AAA rating, near-zero leverage. But integration headaches, not balance sheet strength, are the headline.

2. Introduction

ACC, India’s oldest cement maker (founded 1936), is now 50% owned by Ambuja Cements, which is controlled by Adani. The group—Ambuja and ACC combined—was the second-largest cement player in India as of Sep 2025 with 107 MTPA capacity.

FY26 was a capex and M&A year. The company acquired 55% of Asian Concretes & Cements (2.8 MTPA) in January 2024 for ₹775 Cr. It also integrated Penna Cement (acquired in FY25) and Sanghi Industries mid-year, bulking up capacity from 38.55 MTPA (end-FY24) to over 40 MTPA standalone by FY26.

Management signaled a shift in December 2025: approval to merge ACC into Ambuja, subject to regulatory clearance. This simplifies the holding structure but adds near-term integration distraction.

The quarter ending March 2026 (Q4 FY26) saw sales of ₹7,146 Cr, a 16.9% lift YoY, but net profit collapsed 62.9% to ₹238 Cr. That quarter-on-quarter trough frames the tension: volumes up, but costs and complexity up faster.

3. Business Model: WTF Do They Even Do?

Cement is ACC’s domain: 94% of FY24 revenue and still dominant in FY26.

The company sells two tiers. Gold range (premium): ACC Gold Water Shield, ACC F2R Superfast—marketed to high-end construction. Silver range (mass-market): ACC Suraksha Power, ACC HPC Long Life, ACC Suraksha Power+—competing on price and availability.

FY26 saw premiumization push: trade volume (retail focused) climbed to ~74% of sales, and premium cement hit ~36% of trade sales in Q4. Average realization for cement rose to ₹5,092/tonne (FY24) from ₹4,973/tonne (FY19), a 2% CAGR—not a blowout, but deliberate up-market positioning.

Ready-mix concrete (RMC) is the other leg: 6% of FY24 revenue, down from 9% in FY19. The company runs 86+ RMC plants and sells value-added brands (ACC ECOMAxX, ACC AEROMAxX). This segment grew on realization (+14% per cubic meter from FY19 to FY24) but contracted on volume (down 24%).

Distribution: 13,000+ channel partners and 39,600 retailers (per About section). Retail accounts for 72% of sales, wholesale 28%. The MSA (Master Supply Agreement) with Ambuja is a structural deal: ACC sold 6.6 Mt of clinker and cement to Ambuja in FY24, boosting volume and “profitability,” management says.

The business model is vanilla cement: extract, grind, sell, compete on cost and proximity to end-use. Nothing novel, everything dependent on construction demand, input costs (fuel, raw materials), and logistics.

4. Financials Overview

Figures are consolidated, in ₹ crore.

FY26 revenue climbed ₹4,042 Cr YoY, a clean 18.4% increase. Sales growth was broad: Cement volumes up 16%, RMC realizations contributing, and acquired assets in the mix for a full year (Penna) or partial year (Sanghi).

Yet EBITDA declined 3.3% to ₹2,958 Cr despite higher sales. This inversion signals margin compression—cost headwinds overwhelmed pricing power. Operating margin (OPM) fell to 11.4% (FY26) from 14% (FY25), a 260 bp drop.

PAT slid 11% to ₹2,137 Cr. Tax swung sharply: FY26 tax rate was just 1% (₹19 Cr on ₹2,157 Cr PBT), a historical anomaly driven by prior-year reversals and tax adjustments. FY25 tax rate was 23%. Strip out tax volatility and underlying profit momentum was challenged.

Quarterly Trend (Q4 FY26):

Q4 FY26 revenue was ₹7,146 Cr (+16.9% YoY). But net profit in Q4 was ₹238 Cr, a 62.9% YoY collapse. Operating profit in Q4 was just ₹626 Cr (9% OPM) versus ₹837 Cr in Q4 FY25 (15% OPM). The quarter was compressed by peak cost escalation (West Asia conflict, bag/packing spikes, railway infrastructure delays) that management said would ease into FY27.

5. Market Expectations & Historical Multiples

This section describes how the market is currently pricing the company and how that compares with its own history and peer group. It is descriptive, not predictive.

The market currently pays 12.0x earnings, against a five-year average of roughly 20x. Peer median (Ultratec, Grasim, Ambuja, Shree, JK, Dalmia) sits at 28.68x. ACC’s 12x is a discount to peers—partly because acquired-asset integration is seen as a drag, and partly because management credibility on cost guidance is being rebuilt after FY26 misses.

EV/EBITDA stands at 7.54x against a historical range of 8–12x. That suggests the market is pricing in margin recovery, not decline.

ROE at 10.9% is below the five-year average of 12.6% and well below the cost of equity. ROCE at 11.2% is also depressed, signaling that incremental capital deployed has not yet earned hurdle rates—a focus for FY27.

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