Detailed Narrative
Q3 FY26 Performance Highlights
Nuvoco Vistas reported a strong Q3 FY26, with volumes growing 7% year-on-year to 5 million tons, marking the highest Q3 volumes in the company's history. December alone saw a robust 20% volume growth. EBITDA for the quarter increased by approximately 50% year-on-year to INR 386 crores, despite price moderation. The company's premium products maintained a historic high share of 44% of trade volumes, contributing to overall performance.
Cost Management and Fuel Strategy
The company achieved its lowest blended fuel cost in 17 quarters at 1.41 per Mcal, despite recent upticks in pet coke prices. This was attributed to increased use of Alternative Fuel and Raw Materials (AFR), domestic open market coal, and reduced pet coke consumption (down to 41% from 48% YoY). Management aims to further improve AFR usage to 13-15% by Q1 FY27 and expects to offset potential pet coke price increases through these initiatives.
Vadraj Project Update and Capacity Expansion
The Vadraj Cement Plant refurbishment and project execution remain on schedule, with clinker and grinding units planned for phased operationalization from Q3 FY27 to Q1 FY28. The Surat grinding unit and Kutch clinker unit are expected to be operational in FY27, with the Kutch grinding unit commissioned in H1 FY28. The East expansion project of 4 million tons per annum is also on target, which will scale the company's total cement capacity to 35 million tons per annum post completion. Vadraj is projected to contribute 1 million tons in Gujarat by FY26 exit, scaling to 4 million tons by FY29.
Debt Management and Capital Allocation
During the quarter, Nuvoco Vistas raised INR 600 crores through Compulsorily Convertible Debenture (CCD) issuances, which were used to replace an equivalent amount of short-term bridge financing. The company plans to complete an additional INR 600 crores CCD issuances soon. The debt level at December '25 stood at INR 4,217 crores. Management expressed comfort operating with debt levels of INR 3,500 to INR 4,000 crores long-term, targeting an EBITDA to debt ratio of around 2-ish.
Premiumization and Market Strategy
Premium products continued to be a key focus, with their share reaching a historic high of 44% in Q3 FY26 and 43% for the nine months of FY26, a 300 basis point increase from FY25. The company aims to further increase this premiumization share by 200 basis points annually over the next 2-3 years. This strategy is expected to boost realization by INR 150-200 per ton of cement sold, enhancing overall profitability.
Logistics and Green Power Initiatives
Logistics costs saw efficiency gains, with the lead distance reducing to 326 kilometers in Q3 from 331 kilometers in Q2. This was driven by GPS implementation, increased rail share (37% in Q3), and focus on home markets. In green power, the company plans to de-bottleneck WHR to add another 3.5 megawatts in the next 6-8 months. A 50-megawatt hybrid solar-plus-wind power plant in Rajasthan is expected to be operational in the next 12-18 months, significantly boosting green power mix.
Outlook and Future Growth
Management is bullish on demand, expecting industry growth of 7-8% in Q4 FY26 and targeting a CAGR of 10% volume growth for Nuvoco Vistas over the next two years. Total CAPEX is projected at INR 620-670 crores for FY26, INR 1,000-1,100 crores for FY27, and INR 650-700 crores for FY28, primarily for Vadraj and other routine expansions. The company is also exploring brownfield and greenfield expansion opportunities in the North and Gulbarga regions for future growth beyond FY28.