Good morning. Good morning, everyone. Anand Rathi Institutional Equities welcomes you all to 3Q FY 2026 earnings conference call for Sagar Cements Limited. From the management team today, we have Mr. Sreekanth Reddy, Joint Managing Director, Mr. K. Prasad, Chief Financial Officer, Mr. Rajesh Singh, Chief Marketing Officer, and Mr. Raja Reddy, the Company Secretary. I would now like to hand over the call to Gavin Desa from CDR India for his opening remarks, post which he will then hand over the call to management. Over to you, Gavin.
Thank you, Prasid. I'd just like to add that during this conference call, some of the remarks we'll start with opening remarks from the management, following which we will have the floor open for an interactive Q&A session. Before we begin, I'd like to point out that some statements made in today's discussions may be forward-looking in nature, and a note to that effect was stated in the phone call invite sent to you earlier. We trust you've had a chance to go through the communications that were emailed yesterday. I would now like to hand over to Mr. Reddy to make his opening remarks. Over to you, Sreekanth.
Thank you, Gavin. Good morning, everyone, and welcome to Sagar Cements' earnings call for the quarter ended December 31, 2025. Let me begin the discussions with a brief overview of the market, post which I will move on to the Sagar-specific developments. As we have indicated, overall demand during the quarter, especially the first half, was relatively subdued owing to extended monsoons and festive season. However, we did witness pickup towards the later stage. This trend is continuing as we speak, increasing our confidence of ending the fiscal on a positive note with overall volumes of around 6 million tons. Supported by pickup in demand and better pricing trends will result in improved financial performance. In Q3 FY 2026, Sagar registered a volume growth of 8% year-on-year, while our revenue for the quarter stood at INR 591 crores compared to INR 564 crores in Q3 FY 2025, an increase of around 5%.
EBITDA for the quarter stood at INR 38 crore, which is the same as previous year's Q3 numbers. EBITDA per ton stood at INR 254. We continue to work towards improving efficiencies and profitability through various cost reduction initiatives, including WHRS and solar capacity additions. Lead distance optimization, plant upgrades. Additionally, we expect improving cash flows and planned land monetization to support prudent growth going forward. Loss after quarter, sorry, loss after tax during the quarter stood at INR 64 crores. Our projects at Andhra Cements and Jeerabad are progressing as per plan. The construction of the six-stage preheater at Dachepalli plant of Andhra Cements has been successfully completed and was recently commissioned. The 4.35 MW waste heat recovery project at the Gudipadu unit is expected to be commissioned by the end of FY 2026.
We also expect to commission the expansion of Jeerabad capacity from 1 million to 1.5 million tons by the early part of Q1 FY 2027, and the cement capacity addition at Dachepalli by August 2026. Power and fuel costs stood at INR 1,408 per ton, as against INR 1,456 per ton reported during Q3 FY 2025. Freight costs for the quarter stood at INR 830 per ton, as against INR 835 per ton during Q3 FY 2025. From an operational point of view, Mattampally plant operated at 57% utilization, while Gudipadu, Bayyavaram, Jeerabad, Jajpur, and Dachepalli plants operated at 82%, 66%, 95%, 40%, and 39%, respectively, during the quarter. As far as the key balance sheet items are concerned, gross debt as of 31st December 2025 stood at INR 1,627 crore, out of which INR 1,320 crores as a long-term debt, and the remaining constitutes the working capital.
Net worth of the company on a consolidated basis as of 31st December 2025 stood at INR 1,694 crores. Debt-equity ratio stands at 0.78:1. Cash and bank balances were at INR 83 crores as of 31st December 2025. In summary, we remain committed to delivering sustainable and profitable growth for strengthening the operational excellence, deepening our regional presence, and increasing the use of renewable energy across our manufacturing footprint. That concludes my opening remark. You would now be glad to take any questions that you may have. Thank you.
Thank you, sir. We'll now begin the question and answer session. Anyone who wishes to ask a question, please indicate through a raise hand function. The first question is from the line of Shravan Shah. Kindly provide your company name and go ahead with your question.
Hi, Shravan here from Dolat Capital. Hi, sir. A couple of questions. So first, just on the demand front, and we'll then come to the pricing part. So last time, whatever the number we have said in terms of the growth for individual states of the south and for FY 2026 and FY 2027, will the number remain same, or is there any change? So primarily, we were seeing a high single-digit growth for AP, Telangana for this year, FY 2026, flat to marginal positive for Tamil Nadu, and 3% to 5% for Karnataka. And so just your thought on that front.
Yeah, good morning, Mr. Shravan. Yeah, I think the numbers, what we have discussed during the last quarter call, they more or less hold good. They could be slightly better, but as we speak, the demand uptick has been extremely strong, so the numbers, what we have committed, I think they are holding as discussed before, Mr. Shravan.
Okay. And for us, now when we are saying 6 million ton for this year, FY 2026 volume, if I just translate, and I'm assuming this is only the sales volume and not the clinker, that means that the fourth quarter of this year, FY 2026, we are looking at just a 2.6% kind of a growth. So and then I hope that the fourth quarter growth definitely should be kind of a 7% in the range of that. So just wanted your thought. So is this the number on the lower side that we are seeing? And for FY 2027, last time we said 7 million ton odd. So that number remains intact?
Yes. Now, let us talk of the current financial year's outlook. Yeah, it is 6 million. We did indicate in the past that these are subject to some corrections based on the price. The price has been volatile. So basis that from 5.8 million, we re-revised it to 6 million. So we are holding it to the 6 million now. It should roughly translate close to year-on-year number of close to around 9%, Mr. Shravan. Going to the next year number, yeah, we are holding at this point of time for a 7 million outlook for the coming financial year.
Yeah. So now, sir, on the pricing front, so just want your clarity. So if you, in terms of the state-wise, if you can tell, so in this January, what we heard is that there is a decent hike of INR 15-INR 20 odd in the non-trade front. So your thought, and if you can also specify in terms of the state level, how much till now from 1st January till now, the hike is there in non-trade? And also, at the same time, on the trade front, has there any hike? And if yes, how much?
Yeah. From the middle to end of December, we started increasing the prices. From end of December to now, yeah, we did get around INR 15-INR 20 increase on non-trade. Though at the trade level, the price increase, we started increasing only during the first week of January. But in this part of the world, as you know, Pongal is an important festival. We tried increasing almost INR 15-INR 20, but so far, we could only realize anywhere between INR 5-INR 10 in trade, Mr. Shravan. And speaking across the states that we operate, most of the trends are very similar across all the south states, sir. In Madhya Pradesh, the price increase happened slightly ahead of almost close to INR 10. That is at the end of November itself, non-trade, and it's mostly in the non-trade.
Trade prices have been very flat again for our Madhya Pradesh plant, Mr. Shah .
Okay, got it. So given this scenario, so in terms of for us, in terms of the profitability, so for nine months, roughly around INR 478 EBITDA per ton is there, and we were looking at INR 600-odd. So how one can, and at the same time, do we now believe that even at the end of the, let's say, once the March starts and given the capacities, which are slightly delayed and now will come on stream, this price increase can sustain? Is this the structural price hike or maybe rollback likely to happen in the March? And if that is the case, then how one can look at the profitability for us?
In our case, sir, what we are trying to factor is not a very steep price hike. The current price hike is we are as close as just before the GST revision has happened. So it's not that we have gone back to the Q1 pricing, which was extremely healthy. Given this scenario, what we have penciled in for the Q4 is around INR 550 EBITDA per ton. In all, we should end up very close to INR 500 EBITDA per ton to INR 525 EBITDA per ton for the full financial year. That includes the incentives, Mr. Shah.
Got it, sir. Got it. Thank you, sir, and all the best.
Thank you. Thank you. We now have the next question from the line of Mr. Rajesh Ravi. Kindly unmute yourself, sir, and please ask the question and state where you are from.
Yeah, hi, sir. Good morning. I'm Rajesh Ravi from HDFC Securities. My question pertains to. Am I audible?
Yeah, good morning, Mr. Rajesh. So yeah, you are very much audible.
Great, so if I look at your standalone versus Andhra performance, the cost structure is still strikingly different. We believe your clinker plant is already stabilized at Andhra Cements, so how should we look at your standalone operating cost per ton over around close to INR 3,900, whereas it is for the Andhra Cements capacity. These numbers are still very high.
Yeah, Mr. Rajesh, you should look at - we only commissioned the new preheater at Andhra, sir. All in all, from a year-on-year kind of a number, you should expect around the INR 250 per ton kind of a reduction at Andhra. Now, when you look at the cost, sir, it again adds up the freight. So it could be significantly different across the plants, and when you look at standalone, yeah, it includes Jajpur. It also includes Gudipadu. So each of the units has its own characteristic and proximity to the markets, but all in all, if you look at Andhra's performance, sir, it has been significantly better. We are trying to align it with the other group companies, especially with the Mattampally, because Mattampally plant is one of the most cost-efficient plants. The idea is to replicate the same cost here at Andhra.
I would not say that we have reached there because Andhra doesn't have waste heat recovery compared to Mattampally. But if you look at the specific consumptions and all, we are almost very, very close or better than Mattampally because obviously this is a brand new preheater. So given this situation, fortunately, in the last quarter itself, we are very close to the break-even. I think in the current quarter itself, we expect Andhra to break-even. With the better prices, we hope it should become profitable in the current quarter itself, Mr. Rajesh.
Understood. So for Andhra factory operating cost, because that number would be more comparable at your end, so how much Andhra would be still higher in terms of the cost structure versus Mattampally plants?
Again, see, up to clinker, I think there is, yeah, there is a gap because the electrical power cost at Mattampally includes almost 90% of the power comes from green sources for Mattampally, sir. But whereas in Andhra, we still source from the grid. Only 6 MW solar plant is operational. Except for that, on a specific power consumption, sir, Mattampally is almost at 725-730 kcal per kg of clinker, whereas Andhra is almost sub 720 kcal per kg of clinker. Up to clinkerization, electrical units for Mattampally is around 52 units, whereas Andhra is at 51 units. On a specific consumption, Andhra is already below Mattampally. But the landed cost of fuels as well as the energy cost is slightly different. It would take some more time before we could, on a rupees, we could be very close to Mattampally.
But again, the product mix for Mattampally to Andhra would be very, very different. So it needs to be compared. What I would say is that when we embarked on this investment for CapEx for Andhra, the objective was primarily to be specific fuel consumptions, everything to be lower. From 850-880 kcal, yeah, we could straightaway reduce it to 720 kcal, Mr. Rajesh. So that's a big translation. And from 60-62 units up to clinker, we are already at 51 units. So with the CapEx and the successful commissioning, yeah, we could achieve much more than what we initially thought we would achieve from there.
Great. Understood. So gradually this will narrow, and the difference will remain so because of the energy mix.
Yes, sir. Yes, sir. Again, I'm talking specific to Mattampally.
Mattampally, yes.
Yeah, yeah. Because each unit has its own cost structure because of either raw material costs or the coal landed costs. But as it stands, we are not very far from the best in the business at Andhra.
Understood. And at company level, Q4, you're looking at 500+ EBITDA per ton. Is this understanding right?
Yes, sir. Yes, sir. We are looking at 500-550 because we did factor some amount of price hike, but not the full one what probably is expected to because March is going to be end of the year. So there could be some kind of pricing pressure that has been penciled in internally, sir.
Okay. And is this solely coming from better profitability from Andhra Cements?
I think most of it is not only from better performance from Andhra, sir. Across the units, the operating leverage also is going to be better.
Yes. Okay. Understood, and sir, second on the land sale, what is the progress over there? Can we see some disposal?
Yes, sir. I think we are happy to state that there is only one step left. Most of the other steps have already been covered. We are awaiting for the final government policy, very specific onto the Andhra Pradesh. As indicated last time, I think over a year, year and a half, we should have totally monetized the Vizag land, Mr. Rajesh. From a timeline perspective, as indicated before, we are expecting over the next 18 months for the entire thing to be monetized.
Okay. So nothing much to for this financial year, there wouldn't be anything. Whatever we
No, I think, yeah, I don't think we expected for this financial year. It's only spread over the next financial year. And I think bulk of the money we should have received over the next 18 months.
Over the next 18 months. Okay. Great, sir. Thank you. I'll come back and queue.
Thank you, Mr. Rajesh.
Thank you. Anyone who has a question, please use the raise hand function to ask the question. We have a question from Jaspreet Singh. Kindly provide your company name and proceed with the question.
Yeah, hi. Good morning, Mr. Reddy. And I'm from Equentis PMS. I missed this non-core money that we could realize over 18 months. What's the total value attached to this, sir?
Yeah, good morning, Mr. Jaspreet. The government required rate at this point of time is around four crores per acre, sir, which roughly translates to INR 400. But there would be some expenditure, as you know, and also some capital gain. So we are assuming that we should receive around INR 350 crores net of the expenses that we might incur.
Okay. So net of expenses and net of tax, INR 350 crores?
Yes, sir.
This would be received in one shot, or would it be spread out in that 18 months?
No, I think, see, one of the advisors whose help we are taking for the monetization of this, their view is that Vizag is not such a big market for, there are not many large real estate players around that place for them to absorb in single lot. Probably it should be split into 5-6 convenient parts so that we could monetize in that time horizon, Mr. Jaspreet.
Okay, but ending in that 18-month window only, right?
Yes, sir. Yes, sir. Yes, sir.
Okay. And sorry if I'm asking if you've mentioned it multiple times in the past, but how do we plan to utilize these proceeds, CapEx, debt retiring, or anything?
Our plan is to have a balanced and optimized debt. So for the next two to three years, we do not have large CapEx plans. So most of the money should be utilized to retire the debt, Mr. Jaspreet.
Okay. Which is at a consolidated level about 1,600 plus. Am I?
Yeah. The net debt is around INR 1,450 crores. That's what we expect by the end of this financial year.
Okay. So let's say we retire this and we have some cash flow. So about debt equity then should come closer to 0.5, let's say in a 18-24 months timeframe.
Yes, yes, Mr. Jaspreet. From our medium-term plan, our objective is to be 12 million from increasing it from 12 million to 15 million. But the CapEx should start somewhere around the end of FY 2028 to early part of FY 2029. So for the next good two and a half to three years, we do not have any major large CapEx plan except for the maintenance CapEx that we have. Or the ongoing CapEx anyhow is likely to conclude by the end of next year or middle of next year. So that gives us some additional cash flows to retire the debt.
Okay. Okay. Brilliant, sir. Thanks for giving all that input. Yeah. All the best.
Thank you, Mr. Jaspreet. Thank you.
Thank you, sir. Anyone who has a question, please use raise hand function to ask a question. The next question we have from Mr. Satyam. Kindly state your company name and proceed with the question.
Hi, sir. I am Satyam from KL Capital. Sir, I just wanted to understand the state mix that we have from different states, where would you sell what percentage?
Good morning, Mr. Satyam. From a state mix perspective, for the quarter, yeah, we are at 28% in Telangana with a similar 28% in Andhra Pradesh, around 7% in Karnataka, 6% Tamil Nadu, 9% Maharashtra, 10% Odisha, 8% Madhya Pradesh, 3% Gujarat, and all the other states included at 1%, sir.
Okay, sir. Thank you.
Sir, next question would be, what is the CapEx that we are incurring for 2026 overall as well as for 2027?
Yeah, we did state part of our investor presentation, Mr. Satyam, but just to, yeah, it is on slide number 12 of the investor presentation.
Oh, yeah, yeah. Right, right, right.
But since you have asked, yeah, it's around INR 303 crores for the nine months that we have done. What we have budgeted was around INR 186. For the total FY 2026, it is around INR 489, sir. And for the coming year, what is budgeted is around INR 291.
Understood, sir. Thank you. Thanks. That's it from my side.
Thank you.
Thank you. We have next question from Sir Sanjeet Tambe. Kindly state your company name and proceed with the question.
Yeah, hi, sir. I'm from Antique Stock Broking. So, sorry if I missed this, but will you tell me what sort of capacity additions we are expected by our peers in the markets that we operate in the next 6- 12 months?
We are not expecting much in the next six months, sir. In 12 months, again, we are not expecting anything in the current financial year. In the next, probably before the end of the next financial year, we do expect Ramco's Kolimigundla line two. Same would be the case with the line four of UltraTech, sir. But I may not be very precise with whether it should be in the coming financial year or a quarter later, which should all get into the next financial year. But these are the two assets that we are looking at in AP.
Okay. Thank you. Thank you so much, sir.
Thank you.
Thank you. If anyone has a question, please use raise hand function. We have next question from Shravan. Shravan, please, you can unmute yourself and ask the question.
Hi, sir. For next year, once the project for 4 MW WHRS also starts, broadly at a consolidated level, how one can look at in terms of the cost reduction overall?
Yeah, Mr. Shravan, the only addition, or rather, there are going to be two additions, I would say, or three additions. One on the basic recovery. As you know, it's a 4.35 MW, which should roughly translate a net saving of around INR 100-INR 125 per tonne Gudipadu unit, sir, up to clinkerization. And we have a grinding mill getting added up at Jeerabad. We are hoping it should be in the early part of FY 2027. So that should help us have some operating leverage because Jeerabad is already operating close to 100%. So that should, again, on a fixed cost basis, should help us save a minimum of INR 150-INR 200 per tonne. The Andhra grinding plant primarily would help us achieve the number of electrical units where we expect that is likely to get commissioned by August 2026.
So at least for half a year, it should be available. We expect four to five units kind of a reduction on close to a million tons of sales for half a year, sir. So 500,000 into four units is what we should factor. That should be around INR 25-INR 30 crores we should expect. Sorry, INR 50 per ton kind of a saving is what we should expect at Andhra.
Understood. And then given the current petcoke prices are there, do we see some kind of a 3%-4% kind of an increase at a lower cost level?
Sir, I think we did switch over from petcoke to the domestic coal in some of the assets and to the imported coal at the other assets. Our internal penciling is that for the current financial year, we don't expect any cost increase as far as power and fuel is concerned. For the coming year, as it stands, we expect around 2%-3% kind of an increase at the fuel price. Again, it is too soon, but we would be in a much better situation to confirm for the next financial year, end of this quarter, sir.
Okay. Got it, sir. Got it. And sir, do you see is there still any kind of M&A still left in South?
Yeah, Mr. Shravan, I have absolutely no idea about the activity about M&A because most of these M&A are very specific between a buyer and a seller. Public domain, I think it's in public domain. I have nothing to add on what is already in the public domain, sir. But specifically, we have not seen major intensity or activity that is happening on M&A for the last six months. So we assume that for the next few quarters, it might remain very similar.
Okay. Okay. Got it, sir. Thank you.
Thank you.
Thank you. We have next question from Jyoti Gupta. Kindly unmute yourself and ask the question. Please state your company name as well.
Good morning, sir. This is Jyoti from Nirmal Bang Institutional Equities. Can you hear me?
Yeah, good morning, Jyoti. How are you, ma'am?
I'm very well, sir. Just that I'm a bit unwell. So can't speak, but I hope that I'm audible.
Loud and clear. Yeah.
So I have two questions. One is, any specific reason that we have a sudden spike in depreciation, and is it likely to continue? Second is on the finance cost also, we've had an average of almost like INR 470. This time, it's INR 500, INR 103, I mean, INR 50 crore. Is there a possibility that this will continue? And then on the fuel mix part, while I believe that transitioning from a petcoke to coal may have limited cushion there, however, what is the fuel mix? Because the increase in the fuel cost is almost 15%. I understand the cost of petcoke and coal was high, but still, other companies were able to mitigate in some way. So maybe first is, what is the fuel mix? This quarter, what was the earlier fuel mix, and what is it now in this quarter?
On the finance cost and depreciation part, sir?
Good morning, Jyoti. On the depreciation front, I think we have been capitalizing all the CapEx that we are doing, whatever got concluded. So that actually has added up to the overall kind of a depreciation. Yeah, we did give the mix over a few last quarters on slide 11, Jyoti, of our investor presentation. So that should help you see how the overall kind of fuel mix that we are doing. We switched over from Petcoke imported as well as Indian to the Indian coal as well as imported coal. Yeah, that is helping us mitigate as much extent as possible in terms of the overall. As mentioned, we don't expect any major fuel price increase. Now, on a peer comparison, again, our issue is you should compare apple to apple, even at the product mix. So our product mix primarily is at 55% OPC and 45% blended.
So that also makes it look higher because, again, it's the markets that we service have a slightly higher OPC kind of orientation. So that makes it look higher. But on kind of cost, I think we should be flat for the current quarter. And going into the next year, I think we would be coming back end of this quarter, Jyoti.
What about the coal cess, that INR 400 coal cess?
I think that actually has made the domestic coal and imported coal lower than petcoke.
Yes, it has.
As such, the coal price did not come down. Only the cess actually helped us to mitigate the increased Petcoke kind of a price to a great extent.
That's almost staggered. Quarterly, it is staggered by almost like INR 50-INR 55 per tons. So hopefully, we should see some value incrementally should add in quarter four also. And then the full year, we should be able to see the full impact of this coal cess.
No, I think it's a mix, I would say. In our case, we probably don't have as high inventories. So from that perspective, earlier, we used to keep very large inventories. Yeah, right now, we are running on a quarter ahead. Earlier, we used to do two quarters. Now, we are doing only a quarter ahead. As it stands, we don't expect any major either cost increase or saving on the power and fuel, except for the efficiencies that we have achieved, Jyoti.
Thank you, sir.
Thank you.
Thank you. We now have next question from Parth Bhavsar. Kindly unmute yourself and ask the question. Also, state your company name.
Yeah, hi sir. Sir, this is Parth from Investec. Sir, I had a couple of questions. So the first one, sir, are we accruing any incentives currently? And if yes, how much was it in the current quarter?
No, I don't think we have accrued any interest during the current quarter, sir. The incentives, sorry. Whatever we got was during the Q1 and Q2. Yeah, nothing is due for the current quarter or the coming quarter, Mr. Parth.
Okay. And sir, one clarification. When I look at slide number 11, the fuel pricing, right? So the current quarter's presentation versus the last quarter, when I compare it, the domestic coal pricing, it's quite different. So the last quarter base, basically Q2, in the previous presentation, it shows 1.26 for domestic coal. And the current quarter, it shows 1.72. So.
Yeah, because of the Singareni as fired. Yeah, it is as fired, sir. So we would have fired most of it from Singareni at Mattampally. And also got a lot of domestic coal at Jeerabad, sir. So that is the difference.
Got it. So basically, we should rebase the previous quarters as well? Would that be?
No, I don't think so. It's on as fired basis, sir. So we keep it again depends on if it is 100% Singareni coal and elsewhere we are using imported petcoke. Yeah, pricing would have been that. Now, it is actually a mix of some other than Singareni domestic coal has been used at Jeerabad. So that is the reason why the prices got increased. The Singareni petcoke landed price or as fired cost at Mattampally is sub INR 1.25, sir.
Got it. Okay. So but sir, in the base year, shouldn't it be the same? Because we've rebased in the current quarter.
It's not the current strength that we are giving, Mr. Pat. It's not like we are trying to reorganize. It's the current fuel price strength that we are indicating there.
Right. But that is for the current quarter, right? But what about Q2 FY 2026? That's in the past, right?
Sir, as-fired, sir. It's all relined with as-fired.
Okay. Okay. Got it, sir. Thank you for answering my question.
Thank you.
Thank you. If anyone has a question, please use raise hand function to ask a question.
Prasid, you can close.
Thank you. As there are no further questions, I now hand over the call to management for its closing remarks.
Thank you, Prasid. Yeah, we would once again like to thank each one of you for taking time to join us on the call. I hope you have got all the answers you are looking for. Please feel free to contact our team at Sagar or CDR should you need any further information or you have any further queries. We would be more than happy to discuss them with you. Thank you and have a good day.
Thank you. And now we'll conclude the call. Thank you, everyone, and have a good day.