SAGCEM - Sagar Cements Ltd Share Price

During the earnings call for Q3 FY 2026 held by Sagar Cements, management provided an optimistic outlook for the company. Sreekanth Reddy, Joint Managing Director, indicated that overall volumes for FY 2026 are expected to reach approximately 6 million tonnes, reflecting an increase of around 9% year-on-year. He noted that demand is picking up, which contributes to their confidence in ending the fiscal year positively. Quarterly revenue rose to Rs.591 crore, a 5% increase compared to Rs.564 crore in the previous year, while EBITDA remained stable at Rs.38 crore, resulting in an EBITDA per tonne of Rs.254.

Management emphasized ongoing efforts to improve efficiency and profitability through cost reduction initiatives, including the introduction of a 4.35-megawatt Waste Heat Recovery project expected to be commissioned by FY 2026's end. In terms of forward-looking financial metrics, they anticipate an EBITDA per tonne range of Rs.500 to Rs.550 for Q4 of FY 2026.

The company reported a loss after tax of Rs.64 crore for the quarter. On the cost front, power and fuel costs decreased from Rs.1,456 per tonne to Rs.1,408 per tonne, while freight costs remained stable. The gross debt as of December 31, 2025, stood at Rs.1,627 crore with a debt-to-equity ratio of 0.78:1.

Management also highlighted planned land monetization from Vizag, with an estimated value of Rs.350 crore expected to be realized over the next 18 months. Overall, management remains committed to sustainable growth, enhancing operational excellence, and increasing renewable energy usage across their footprint.

Major Questions and Answers from the Q&A Section

Question 1: "Will the growth numbers for individual states of the south for FY 2026 and 2027 remain the same as discussed last quarter?"

Answer: Yes, the growth numbers we discussed last quarter remain intact. We expect high-single digit growth for Andhra Pradesh and Telangana, flat to marginal positive for Tamil Nadu, and 3% to 5% for Karnataka. Demand has picked up strongly, reinforcing these estimates.

Question 2: "For FY 2026, is the volume outlook of 6 million tonnes still on track despite a slower growth forecast for Q4?"

Answer: We are holding the FY 2026 volume at 6 million tonnes, reflecting a year-on-year growth of about 9%. While Q4 may see lower growth, we anticipate potential corrections based on pricing trends, which have been volatile.

Question 3: "What are the pricing trends on both trade and non-trade fronts that have emerged in January?"

Answer: We've observed a price increase of Rs.15 to Rs.20 on the non-trade side since mid-December. For trade, we aimed for a Rs.15 to Rs.20 hike during the first week of January but have only managed to see Rs.5 to Rs.10 realized so far, largely influenced by the festive season.

Question 4: "What is the EBITDA per tonne forecast for Q4 and the full financial year, given current profitability metrics?"

Answer: For Q4, we are expecting EBITDA per tonne to be in the range of Rs.500 to Rs.550. For the full financial year, we anticipate the overall EBITDA per tonne to be about Rs.500 to Rs.525, including incentives.

Question 5: "What is the status and expectation regarding your land sale for monetization?"

Answer: We are close to completing steps needed for land monetization in Vizag, aiming to realize about Rs.350 crore net of expenses within the next 18 months. The proceeds will largely go towards debt reduction rather than major CapEx.

Question 6: "Can you provide details on the CapEx plan for FY 2026 and FY 2027?"

Answer: For FY 2026, we budgeted around Rs.489 crore overall, with Rs.303 crore spent in the first nine months and Rs.186 crore planned for Q4. For FY 2027, we have allocated approximately Rs.291 crore in CapEx.

Question 7: "What can be expected in terms of cost structure between your standalone and Andhra Cements plant?"

Answer: Andhra's costs are about Rs.4,800 per tonne, but we expect to reduce this by around Rs.250 per tonne as the new preheater stabilizes. The standalone cost is around Rs.3,900 per tonne, affected by different freight costs and efficiencies across plants.

Question 8: "What are the anticipated changes in the fuel mix and its cost for the coming quarters?"

Answer: We forecast a slight increase of about 2% to 3% in fuel costs due to market conditions. Currently, we've switched from pet coke to domestic and imported coal to mitigate costs, expecting no major increases in the current financial year.

Question 9: "Are you currently accruing any incentives, and what was the EBITDA contribution from this?"

Answer: We have not accrued any incentives in the current quarter; any incentives were recorded during Q1 and Q2 of FY 2026.

Question 10: "What percentage of sales came from different states in this quarter?"

Answer: For Q3, our sales mix included 28% from both Telangana and Andhra Pradesh, 7% from Karnataka, 6% from Tamil Nadu, 9% from Maharashtra, 10% from Odisha, and 8% from Madhya Pradesh, among other states.