Good morning, ladies and gentlemen. Welcome you all to the Q2 FY 2027 results conference call of Sagar Cements Limited. From the management, we have with us today 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 comments, post which we will hand over the call to the management. Over to you, Gavin.
Thank you, Manish. Thank you for the introduction. Just like to add that some statements made in today's discussion may be forward-looking in nature, and a note to this effect was stated in the con call invite sent to you along with the financial presentation and the statements. I'd now like to request Sreekanth to start the opening remarks. Over to you, sir.
Thank you, Gavin. Good morning, everyone, and welcome to Sagar Cements earnings call for the quarter and half year ended September 30th, 2026. Let me begin the discussion with a brief overview of the market, post which I'll move on to Sagar-specific developments. The second quarter witnessed a relatively resilient demand environment for the cement industry, despite the seasonal slowdown associated with the monsoons. Construction activity across key markets remained reasonably healthy, supported by steady progress in infrastructure projects undertaken by both central and state governments, alongside continued demand from the housing and construction sectors. The relatively uneven distribution of rainfall across the regions also helped moderate the seasonal impact on overall cement consumption. On the pricing front, cement prices remained soft during July and August before recovering to some extent during September.
Despite near-term seasonal challenges, the industry's medium- to long-term demand outlook remains encouraging, supported by sustained infrastructure investments, urbanization, and a healthy pipeline of housing and industrial projects. Moving on to Sagar-specific developments, we delivered a healthy volume growth of 26% during the quarter, reflecting resilient demand across our key markets and steady execution despite the monsoon-related slowdown. Consequently, revenue increased by 17% year-on-year, supported primarily by higher volumes. We remain confident of achieving our FY 2027 volume guidance of approximately 7 million ton, supported by our expanded capacity and improving demand outlook. From an operational standpoint, EBITDA per ton for the quarter stood at INR 265, profitability continue to reflect elevated input costs, particularly across fuel, packaging, and other operating expense owing to geopolitical developments in West Asia.
Our ongoing cost optimization initiatives, including increased utilization of waste heat recovery systems, improvements in operating efficiencies, and benefits from our recent capacity additions helped mitigate a significant part of these pressures. The quarter also witnessed planned maintenance shutdowns at certain facilities, which had an impact on operating performance. [inaudible] Can I request some of you to please mute? Thank you for your understanding. Looking ahead, we expect profitability to improve during H2 FY 2027, supported by post-monsoon recovery in demand, increasing renewable energy usage, ongoing logistics, optimization, and efficiency gains from our recent plant upgrades. These initiatives are expected to progressively strengthen our cost structure and support margin improvement over the coming quarters. On the CapEx front, we completed 0.75 million ton grinding capacity in Andhra during the quarter, further strengthening our manufacturing footprint and taking our overall capacity to 11.75 million tons.
Alongside the recently commissioned 4.35 megawatt waste heat recovery capacity at Gudipadu and 500,000 ton expansion at Jeerabad, these investments are expected to enhance operating efficiencies, support higher capacity utilization, and position us well to capture future demand. Coming to the key operating metrics, power and fuel cost stood at INR 1,473 per ton during the quarter compared to INR 1,428 per ton in Q2 FY 2026. Freight cost stood at INR 900 per ton, compared with INR 855 per ton in the corresponding quarter last year. In terms of plant-wise operations, our Mattampally facility operated at 73% utilization, while Gudipadu, Bayyavaram, Jeerabad, Jajpur, and Dachepalli operated at 85%, 52%, 72%, 38%, and 57%, respectively during the quarter. Loss after the profit stood at INR 52 crore.
Turning to the balance sheet, gross debt as of September 30th, 2026, stood at INR 1,735 crore, out of which INR 1,482 crore comprising long-term borrowing, while the balance represent working capital borrowing. Consolidated net worth stood at INR 1,781 crore, while the debt-to-equity ratio was at 0.83:1. Cash and bank balances stood at INR 106 crore as of 30th September, 2026. That concludes my opening remarks. We would be glad to take any questions that you may have. Thank you.
Thank you. We will now begin with the question and answer session. Request all the participants who have questions, please indicate by raise of hands. We will take the first question from Niteen S Dharmawat. Please go ahead, Niteen.
Yeah, thank you, Manish. Thank you, Mr. Reddy. Good morning. Am I audible?
Yes, you are. Please go ahead.
Okay. The first question is, this is stripping out the INR 7.5 crore cess write-back. Standalone EBITDA was at around INR 47 per ton this quarter. Why are our plants earning less than Andhra Cements, and when do they recover?
Yeah, Mr. Niteen, you should be aware during this quarter, the plants at Mattampally and Jeerabad were under maintenance shutdown, sir. At Mattampally, it has been a long and expensive kind of a shutdown. That is the reason why we are happy to state that Andhra is doing well, but other plants had the shutdown, sir. I am sure in the coming quarters, even the operations at all the other units would be equivalent or much better than Andhra, Mr. Niteen.
Perfect. Okay. Now, 3 million tons per annum and did INR 402 per ton this quarter. What utilization EBITDA do you need there for Andhra to cover its own INR 127 crore of annual interest, and by when?
See, I think the operations at Andhra, we should see the break-even in the second half, sir, at least at an operational level. Because as we have seen consistently, the volumes have been moving up. We are still falling short of around 20,000 tons- 30,000 tons per month, which we should make up during the current half. We do not see challenge for Andhra to break-even. If not in the current year, by I think Q1 next year, we should start seeing the break-even point of Andhra and start making money.
So far we used to give plant-wise utilization number. Can we restore this plant-wise utilization also and also give quarterly pledge number missing in the presentation?
I think even in the current speech that I have told, we did share the plant-wise number.
Yeah, you shared in the speeches.
Yeah, but we will be more than happy sharing it, Mr. Niteen, good.
Yeah, yeah. Because that will be available beforehand, before the call starts. The net debt is rising against our own projections. So net debt is.
Yeah, net debt has risen, and I think it more or less stabilizes because as you know, the CapEx is almost for conclusion, sir. So we have more or less drawn the entire thing. I think it should remain more or less at same level for the current quarter. From the next quarter onwards, it should start sliding down, Mr. Niteen.
Okay. Freight is at five-quarter high at around INR 900 per ton.
Sir, I think diesel prices have gone up, sir. You should be aware. Diesel prices have gone up. I think it should more or less stabilize, so hoping that diesel price, there may not be any significant reason in that. The freight more or less should remain flat from here on.
Perfect. in May, you guided, and in current call also you guided for 7 million ton projection, and it was at INR 600 per ton and INR 580 EBITDA. H1 came at around INR 355. What is the revised full year EBITDA number?
I think we should comfortably do. Unfortunately, the input prices have scaled up, but we should be up of INR 350-INR 375 crore for the full year, which should roughly translate to INR 525-INR 550 per EBITDA per ton, Mr. Niteen. Instead of INR 410 odd crore that we have projected, I think we should end up anywhere between INR 350-INR 375. This with increased realization and increased savings. Unfortunately, the input prices also have gone up. From our internal estimates, I think we should end up anywhere between INR 350-INR 375 crore, which should roughly translate to INR 525 per ton at EBITDA.
And peers, including UltraTech, which is pretty large in size, saying South is doing very well in their con calls. They repeatedly said in the last call. So, why are we not able to see this in our results?
Sir, I think their statement we fully concur, sir. I think you will start seeing it from here on, Mr. Niteen.
Okay. Our ROCE is also extremely low. When will we see the improvement in it?
Sir, I think as you would appreciate, there has been a very aggressive kind of CapEx that has happened over last two years. Unfortunately, during this time, even market also was not supportive, Mr. Niteen. We see good times from here on, especially on the demand side. As I have indicated, demand has been fairly strong. We believe the same momentum should continue at least for next two years. Given this scenario, we strongly believe, and that is the reason why we also followed the, I would not say aggressive CapEx plan, but we did go for the CapEx, having waiting for this demand to shape up, and fortunately it has come now. So we believe from here on, we should strongly start getting increased kind of a margin and much better return ratios, sir, instead.
Perfect. Should we conclude that the bottom has been made for the South cement cycle with your experience? Because last time when we spoke, you said that you've not seen such a difficult time in your experience of more than 25 years. Should we conclude that the bottom has been already made and now
Yeah, there are two things, Mr. Niteen. One is on the pricing and the other on demand. Demand, I think, we are going to hit highs every quarter from here on. When it comes to pricing, sir, so far the pricing for last few months has been, I would say, better than what we have achieved in the past. But these prices, at the best, would cover the increased kind of a cost. In our own case, the advantage for us at Sagar has been our volume slowly started, our capacity utilization slowly started increasing, and at the same time, some of the CapEx also was for savings. All of them started acting. I would say that we have already hit our bottom when it comes to our own margins.
From an industry perspective, we believe that bottoms, we don't want to go back to the bottoms, but I would reserve my comments because it's a more market-related issue. As far as Sagar is concerned, I think we have hit our bottom, and from here on, we should only look up for Sagar. Even a small correction in the price should fairly give decent return is what we strongly think, sir.
Should we say that we'll be crossing 65% overall, 65%-70% overall utilization for Sagar?
Yes, sir. I think we are looking at if same demand trends continue, I think next year we are targeting close to around 65%-70% capacity utilization at overall numbers, at full capacity, Mr. Niteen,—
And for H2?
—challenges in East.
And for H2?
Yeah, I think H2, we should be up of close to 70%, 65%-70%. I think same numbers is what we are projecting for the coming years, sir.
Got it. Thank you so much and wishing you best, sir.
Thank you, Mr. Niteen.
Thank you. We will take the next question from Shravan Shah. Please go ahead, Shravan.
A couple of questions. Just to get clarity, for this year, we said that we will be doing a 7 million ton volume. Next year, last time you said, and the way we are saying 65%-70% kind of a utilization. Next year, how we can look at in terms of the volume?
I think we are targeting it around 8 million ton- 8.25 million ton, Mr. Shravan.
Okay. Now, sir, in terms of the profitability part, you said that for full year, we are looking at INR 350 crore-INR 375 crore kind of a EBITDA. In 1H, we have done INR 118 odd crore. So kind of a INR 230+ crore kind of a that. If you can help us, because obviously everything links to the price, that's the most important. Yeah.
Shravan, I'm not preempting. What we are indicating is INR 350 crore - INR 375 crore. Yeah, from what we have closed, it also includes some maintenance costs, so we believe that part is behind. Having said that, we are talking of around additional INR 300 of INR 300 EBITDA per ton incremental, or INR 355 what we have done for the first half. This INR 300, actually what we have seen is a INR 500-INR 550 at EBITDA level realization increase. However, we have seen around INR 200 cost increase because of fuel. Overall, we are seeing around INR 650 EBITDA per ton for the next half, Mr. Shravan.
Okay. Got it. If you can break down in terms of the price hike. From the Q2 average till now, obviously, there is a significant price hike both in trade and non-trade. If you can state-wise or maybe South, Maharashtra, MP.
Yeah, Mr. Shravan, let me state the South one first. Quarter could be a challenge because most of the price hikes have happened only in the September month. From August to September, what we have seen is a INR 20 per bag price hike in non-trade and a INR 20 price hike in terms of trade. From September to October, what we have seen is a further INR 20 hike in non-trade, but only INR 5 hike in trade. This is in South, sir. Whereas in the other regions, what we have seen is only a INR 5-INR 10 kind of a price hike across Madhya Pradesh, and to certain extent, INR 5 hike in Odisha. More or less flat in the other markets. Maharashtra, we have seen some price hike, but more or less it got evened out, Mr. Shah.
Okay. In terms of the Vizag land sale, anything there?
See, Mr. Shah, I think end of this financial year, we should have progressed to the point where we should start receiving the advance, and we should have received some advance before end of this financial year. Good news is that there are a lot of inquiries, so there is some progress. In the current financial year, we should have seen receipt of advance for the particular land, Mr. Shah.
How much one can look at in terms of this year and the—
I think at this point of time, I would stick to what we have indicated before. We are expecting INR 350 crore of total monetization value for that Vizag land. Around INR 150 odd crore is what we are expecting as advance. Again, I am talking of net value, so this is post some corrections to the tax that we have to pay and certain expenditure that we have, Mr. Shah.
Okay. Lastly, in terms of the, for this quarter Q2, in terms of the South and state level, how was the demand and for full year, how we are looking at in terms of the demand?
I think quarter would be optical, Mr. Shravan. I think year to date, AP and Telangana have grown up of 15%. Karnataka has grown more or less at 2%-3%. I would assume that it is flat. Tamil Nadu has grown at +10%. Kerala has grown at +12%. Maharashtra at +10%. Odisha almost flat. Madhya Pradesh has grown at around 7.5%-8%. Gujarat has grown at close to around 5%, sir.
Okay. Got it, sir. Thank you and all the best.
Thank you.
Thank you. Anyone who has a question may indicate by raise of hands. We'll take the next question from Rajesh Ravi. Rajesh, please go ahead.
Hi, sir. Good morning. Sir, coming back to this question of margin improvement for second half. First, the volume target 7 million ton is only cement or cement plus clinker?
I think we always indicate only cement, sir. We do not indicate the clinker. We have never done. The 7 million ton is only on cement side, sir.
Okay. The margin improvement which you are looking at, you mentioned that there have been INR 20 in the non-trade market as well as in trade. South prices have gone up by INR 20 per bag, both in September as well as in month of October. October, I think you mentioned trade only INR 5 increase has happened, whereas in a non-trade, both the months we have seen INR 20 price hike, right?
Yes, sir, Rajesh. It is INR 20 each for each month.
Each of the month.
Yeah.
On a net basis, net of discounts and anything else, how much is the if these prices, suppose October prices were to sustain and no further changes happen?
Mr. Rajesh, we have got net because we are talking of South, but overall we have Orissa, Maharashtra, and other states. What we have seen at Sagar is INR 25 per bag on an average from exit of August all the way so far. Again, it includes September and all the way up to end of October. We have seen on an average INR 25 per bag, which is roughly translating to INR 500 odd per ton increase at realization level, Mr. Rajesh.
On average basis, average of Q3 versus Q2, this INR 500 would move to north?
I think average could always be a challenge. I think we should take this number because bulk of the increase happened only end of September, so we can assume that this should be the average between Q2 to Q3. That should be so far has been the holding thing, sir.
Understood. On the costing side, you mentioned there is a INR 200 jump and largely that should be?
See, the INR 200 jump is all the way up to end of August, end of January 2027, Mr. Rajesh, because more or less our fuels are covered that far. We still probably may have to look at last two months of the current financial year. That has not been penciled in. Up to end of August, in our case, it has gone up by INR 200, sir.
Okay. In that case, because you mentioned that your Mattampally plant had expensive shutdowns and maintenance
Yeah, that is overall from a—
Yes.
—from waste heat recovery running and the maintenance cost reduction, we expect a saving of anywhere between INR 50 -INR 75 per ton saving that we have not penciled in. That is always contingency, Mr. Rajesh.
Understood. Any uplift gain also you are looking at? Because your volumes have remained firm in past two quarters.
That is what we are translating INR 50 -INR 75 is because of the operating leverage gains, sir.
No, from the maintenance shutdowns and all which were there in Q2, which would not flow through in Q3, Q4, that would not be an additional savings?
All that has been penciled in, sir, because some of the maintenance has been large, so they have been capitalized, Mr. Rajesh. Whatever is relatively lower, that is what we are trying to indicate here. See, we did change kiln shells, we did go for some of the major maintenance, which is more on a capitalized basis. But there are some costs that has been penciled in. Quantifying them at this point of time is a challenge, but we expect it to be better than what we have indicated, sir.
Okay. If prices do not go south from here on, is it fair to assume that Q3 we will be looking at north of INR 600 margin?
I think we should, yeah, we should look at INR 650 kind of an environment, sir.
For Q3? Okay.
Yes.
Understood. On CapEx front, I see most of your CapEx is already done.
Except for probably some cash flow related to CapEx might flow into Q1 of next year, but everything is done, sir. Everything is done.
Okay. H2 onwards, there should be a strong recovery in operating profits, and the CapEx outgo should taper down, and hence the net debt number should start to look lower?
We believe that for Q3, net debt probably should remain where it is. From Q4 onwards, it would aggressively start coming down, sir.
Okay.
We just commissioned end of September, so some of the CapEx also is due into the current October we did put some CapEx and into November, but more or less the same number, we would not cross this number, barring a small delta, but from Q4 onwards, it will start aggressively come.
Understood. Hope to see good numbers here on, and the Vizag land sale meaningful progress would be much needed. Thank you, sir.
Thank you.
Welcome .
Thank you. We'll take the next question from Parth Bhavsar. Please go ahead.
Hi, sir. Sir, thank you for the opportunity. Sir, you mentioned a couple of things. Your cost, you are covered till January, right? That would basically imply a INR 200 per ton sort of cost increase.
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Hello?
Yes, sir.
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Rajesh, if you could, sorry, mute your line, please.
Sir, so basically your landed cost, fuel cost in Q2 was INR 1.93. Is that right? kcal cost?
We did indicate in the presentation.
Yes. Yeah. So basically that calculation is INR 1.93. This would go up to how much, or like this will stay at current levels?
See, I think more or less there should be a small delta in that, but very minor one which will not really impact all the way up to end of January. The ship has just landed, Mr. Parth, so more or less we should stabilize at those numbers. We are covered all the way up to January is what I have indicated. It will be sub INR 2 per 1,000 kcal or per thermie. Yeah, that should be till end of January.
Okay. And sir, if we like assume that, you know, we have to start buying it at spot, so what sort of price hike would be required to cover up?
I think another INR 200 would be a safe assumption, Mr. Parth, but we have to see how it is shaping up.
Okay. Okay. Sir, what is the gap between trade and non-trade in all the regions?
Sir, I think in the current situation, South, I think we make more money in non-trade than trade with the increase that we have seen, or more or less. See, in our case, as indicated even earlier, our trade and non-trade prices more or less would be very similar, sir. See, most of the time what happens is at a margin level, both are not very different. Yeah, optically the realization looks higher purely because discounts and everything in trade is offered subsequently. That includes discount and all. So you invoice higher and then offer discounts and all. So optically the realizations look very high in trade, whereas in non-trade everything is stripped off. So from a margin perspective, we rest assured, sir, historically has been the case barring some time, but margins are almost similar for both trade and non-trade in our case.
Got it. Sir, last question on the fuel mix. The fuel mix that we have mentioned, this would basically continue to be the mix even going ahead, right?
Yes, sir. I think we are mostly shifted to domestic. We have less petcoke. The petcoke primarily is both at Gudipadu and Jeerabad, and primarily are the domestic sources. There is some percentage which is coming from South Africa or US NAPP coal, sir. I mean, this is the mix which should go forward because that's how we have made our inventory.
Perfect, sir. Those were my questions. Thank you.
Thank you.
Thank you. I will just take a couple of questions from the chat. One is on the, you are expecting much better H2 FY 2027 going by your commentary. On the volume guidance of 8.25 million tons for FY 2028, what kind of EBITDA per ton are we looking at? That is first question. What is the net debt by the end of FY 2027 and 2028?
See, I think our net debt position, our stated goal is to look at cutting it by half over next two years' time from current INR 1,600 crore- INR 1,450 crore kind of net debt position. We would like to see some INR 700 crore kind of a thing over next two years' period. What we generally pencil in, like for even for the current year, what we looked at was INR 650-INR 700 EBITDA per ton for the full volume. Same is the numbers that we look at it, sir. We end up correcting it closer to the quarter or closer to the timeline. But what we are penciling in is around INR 650 EBITDA per ton for 8 million ton - 8.25 million ton kind of a volume. Around INR 500 odd crore is what we are looking at for the next year.
Hope I addressed all the questions, Manish, that you have asked.
Yes, sir. Net debt for FY 2027 and FY 2028.
I think we should start looking at around INR 250 crore of debt getting reduced from next year onwards, plus the realization, monetization from the Vizag land.
Got it. Sir, one more question is what is the average realization today for trade and non-trade post the two hikes?
Yeah, Mr. Manish, can you repeat the question please?
What is the average realization today post the two recent hikes?
I think we are talking of capacity realization post the hike?
No, the price realization, sir. Average realizations.
See, as I mentioned, sir, there has been on an average at a gross company level, at a consol level, we have seen close to INR 500 higher realization at the company level compared to Q2, sir. So that's a simple add up. So you should look at plus INR 500.
Got it.
You have to net it off with the GST correction.
Got it. Okay. We'll take the next question from Vibha. Vibha, please go ahead.
Yeah, thanks. Yes. Hi, sir. Most of the questions have been answered. Sir, one question on incentives. How much incentives we have received for Jeerabad unit and what is the remaining incentives that we are going to receive in the coming quarters or year?
See, I think the expected incentive for Jeerabad is at INR 30 crores per year. I think we did receive another INR 50 crores is what we are expecting for the 2 .5 years, Vibha.
Yeah. Also secondly, sir, on WHRS capacity. How much capacity we are going to have in the FY 2027 and for FY 2028? And what type of savings we are expecting from that?
Yeah, we did indicate there is only one waste heat recovery that is pending, that is at Andhra, which our CapEx is for FY 2028, not anytime soon. We are also expecting a 7 megawatt, 7 megawatt-8 megawatt solar plant at Jeerabad for the coming year. The expected savings again is something which we have to pencil in. For Andhra, when waste heat recovery will get commissioned, we should expect INR 1.5 crore per month kind of a saving at Andhra. For solar, we are expecting close to around INR 4 crore-INR 4.5 crore at Jeerabad for full year, as and when it gets commissioned.
Okay. Thank you so much, sir.
Thank you.
Anybody who has a question may indicate by raise of hands. We can go ahead with Mr. Shravan. Please go ahead.
Hi, sir. Anything on the Superfine Building Materials division? Anything finalized there?
Yeah, we just got approval from the board for the CapEx, Mr. Shravan. We did identify the land in Dhulsi in West Bengal. We should start the operations by end of this quarter, from a microsilica perspective. There is some amount of CapEx that is required at Bayyavaram for making into ultrafine GGBS. We just got the approval, so we should start looking at some result probably middle of Q4 onwards, Mr. Shravan.
So sir, how one can look at in terms of, so let's say, this quarter, once we start and maybe fully—
Yeah, I think in the current financial year, we are not expecting major kind of an uptick into the EBITDA. For the next year onwards, the next year being the first full year of operations for that, we are only assuming certain capacity utilization. I think it should contribute anywhere between INR 25 crore-INR 30 crore of EBITDA for the next year, subsequently to scale up aggressively from there on, Mr. Shravan.
So, there are INR 20 crore, INR 25 crore EBITDA. So at what revenue we are looking at?
I think in that business, the EBITDA margins are upwards around 35%-40%, Mr. Shravan.
Okay. And the CapEx would be how much at that up?
Looks very negligible, I think. I think the overall CapEx that is projected is around INR 60 crore spent over next 18 months, Mr. Shravan.
Okay, INR 18 crore.
Yeah, this is INR 60 crores, INR 80 crores.
Okay. INR 60 crores.
INR 60 crores and INR 20 crores of working capital has been projected.
This INR 60 crore we will be spending in next—
Over 18 months, sir. This is more an It's not a CapEx at Bayyavaram, whereas CapEx at Dhulsi. Because in Bayyavaram, it's more a modification of separators and all, Mr. Shravan. It's more in some portion of this CapEx also is a maintenance CapEx actually.
Okay. Got it, sir. Got it. Thank you and all the best, sir.
Thank you.
Thank you. Anyone who has a question may indicate by raise of hands. Sir, as we don't have any further questions, I would like to hand over it back to you for your closing comments.
Yeah, we would once again like to thank each one of you for joining on the call. I hope you got all the answers you were looking for. Please feel free to contact any of our team at Sagar or CDR should you need any further information or have any further queries. We will be more than happy to discuss with them. Thank you. Have a good day. Happy Deepavali.
Thank you, sir. And thank you, everyone. This concludes the call for today. Thank you.
Thank you, Manish.
Thank you.