Sagar Cements Limited Q3 FY26 Earnings Call Summary

Summary

Sagar Cements Limited - Q3 FY 2026 Earnings Call Summary Thursday, January 22, 2026 11:00 AM

Event Participants

Executives 4 K. Prasad (CFO), Raja Reddy (Company Secretary), Rajesh Singh (CMO), Sreekanth Reddy (Joint Managing Director)

Analysts 7 Jaspreet Singh, Jyoti Gupta, Parth Bhavsar, Rajesh Ravi, Sanjit Tambe, Satyam Kesarwani, Shravan Shah

Financials & KPIs

Geographic & Segment Commentary

• South India (Telangana/AP): These markets represent the core footprint, with Telangana at 28% and Andhra Pradesh at 28% of sales mix. Management noted a strong demand uptick in January with price hikes of ₹15-20 in non-trade and ₹5-10 in trade segments following the festive season.
• Central & East India: Madhya Pradesh (8% of mix) saw price increases of ₹10 in late November, primarily in non-trade. Odisha (10%) and Maharashtra (9%) remain key growth territories with plant utilizations varying significantly (Jajpur at 40%, Jeerabad at 95%).
• Plant Utilization: Operational efficiency varied across locations: Gudipadu (82%), Bayyavaram (66%), Mattampally (57%), and Dachepalli (39%). Jeerabad operated at near-full capacity (95%), prompting a planned expansion to 1.5 million tonnes.

Company-Specific & Strategic Commentary

• Asset Modernization: Successfully commissioned a 6-stage preheater at the Dachepalli plant (Andhra Cements), reducing specific fuel consumption from ~850 Kcal to 720 Kcal per kg of clinker.
• Green Energy Focus: 90% of power at the Mattampally plant now comes from green sources; a new 4.35 MW WHRS project at Gudipadu is slated for completion by end of FY 2026.
• Non-Core Asset Monetization: Company is in final stages of monetizing Vizag land (approx. 100 acres) with an expected net realization of ₹350 crores over the next 18 months to retire debt.
• Operational Efficiency: Targeting a reduction of 4-5 electrical units per tonne at Andhra Cements through grinding plant upgrades expected by August 2026.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Pricing Trends

• Question: What is the status of recent price hikes across trade and non-trade segments? (Shravan Shah)
• Answer: Non-trade prices rose ₹15-20 since late December. Trade hikes of ₹15-20 were attempted in January, but only ₹5-10 has been realized so far due to regional festivals (Sreekanth Reddy).

Andhra Cements Efficiency

• Question: Why is the cost structure at Andhra Cements significantly higher than the standalone business? (Rajesh Ravi)
• Answer: Andhra Cements currently lacks the Waste Heat Recovery (WHRS) benefits seen at Mattampally. However, the new preheater has already reduced power consumption to 51 units (from 60+) and fuel consumption to 720 Kcal (Sreekanth Reddy).

Debt and Monetization

• Question: What is the update on the non-core land sale and its proceeds? (Jaspreet Singh)
• Answer: We expect ₹350 crores net of taxes/expenses over 18 months. The 100-acre site will likely be sold in 5-6 parcels to accommodate local market capacity. Proceeds will be used exclusively to retire debt (Sreekanth Reddy).

Future Capacity

• Question: What is the long-term capacity target for the company? (Jaspreet Singh)
• Answer: We aim to reach 12 million tonnes in the medium term, with a further goal of 15 million tonnes. However, no major new CapEx will start until late FY 2028 or early FY 2029 (Sreekanth Reddy).

Key Takeaway

Sagar Cements reported a transitional third quarter, characterized by steady 8% volume growth despite seasonal headwinds, though profitability remained pressured with EBITDA per tonne at ₹254. The company has focused heavily on structural cost reductions, notably the commissioning of a new preheater at Andhra Cements which significantly improved fuel efficiency. Strategic focus remains on debt deleveraging, supported by the planned ₹350 crore monetization of Vizag land and a pause in major new CapEx until FY2028. Management expressed confidence in achieving 6 million tonnes for FY2026 with a projected Q4 EBITDA expansion to ₹500-550 per tonne driven by operating leverage and improved regional pricing. While fuel costs remain a watch point for FY2027, the transition to green energy and higher capacity utilization at expanded sites provide a clear path toward sustainable margin recovery.