Why Ambuja Cements and ACC don’t need a merger

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Editor's note: EBITDA per tonne is a boring yet important financial ratio that’s widely used to measure profitability in cement companies. EBITDA is short for earnings before interest, taxes, depreciation and amortization. When SY (we’ll call him that as he asked not to be named), an analyst who has been tracking the cement sector for 17 years, happened to see this particular number of ACC, the country’s oldest cement maker, he was surprised. That’s putting it mildly. He was actually astounded to see the growth in ACC’s profitability.  ACC had managed to grow this ratio faster than peers like UltraTech Cement, the country’s largest, for the nine months of calendar year 2021. In the third quarter of the year, for instance, while ACC’s EBITDA per tonne grew by nearly 5%, that of UltraTech fell 7%.  “The EBITDA per tonne of Ambuja Cements, which like ACC is also owned by Swiss major Holcim, also dropped. But by just 5%. It also outperformed most of its peers in the nine months. This is the first time I’m seeing something like this,” says SY.  Many …