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    Sagar Cements Q1 FY27 earnings call

    SAGCEM
    Construction Materials·28 Jul 2026
    Management Summary

    Sagar Cements reported a robust 13% volume growth and 5% revenue increase in Q1 FY27, supported by operational expansions. However, profitability was challenged by elevated input costs and competitive pricing, resulting in an EBITDA per tonne of ₹451 and a net loss of ₹28 crore. The company remains confident in achieving its FY27 volume and EBITDA targets, banking on easing input costs, ongoing efficiency initiatives, and debt reduction through asset monetization.

    Highlights

    5

    • Delivered a healthy volume growth of around 13% during the quarter, reflecting resilient demand.

    • Revenue increased by 5% year-on-year, driven primarily by higher volumes.

    • Successfully commissioned the remaining 1.55 MW waste heat recovery at Gudipadu and completed 0.5 million tonne capacity expansion at Jeerabad.

    • Expect input cost pressures to gradually ease as geopolitical situation normalizes.

    • Andhra Cements capacity utilization expected to reach close to 60% by end of FY27 from sub-30%.

    Concerns

    4

    • Profitability and margins moderated during Q1 due to elevated input prices across energy, fuel, and packaging.

    • Pricing momentum moderated towards the end of the quarter amid competitive intensity and regional market dynamics.

    • Loss after tax for the quarter stood at ₹28 crore.

    • Q2 is seasonally a difficult quarter with expected operational stress due to rains, shutdowns, and higher maintenance expenditure.

    Key financials

    Single quarter

    06 metrics
    1. 01Volume Growth13%+13%YoY
    2. 02Revenue Growth5%+5%YoY
    3. 03EBITDA per Tonne₹451
    4. 04Power & Fuel Cost per Tonne₹1,484
    5. 05Freight Cost per Tonne₹858

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    ₹240 crores

    Debt

    Gross ₹1,704 crores · Net ₹1,599 crores

    Liquidity

    Cash ₹105 crores

    Guidance & targets

    7
    CategoryTargetPriority
    Volume
    Total Volume (excluding clinker sales)
    7 million tons
    		High
    Profitability
    EBITDA per tonne
    ₹500 to ₹550
    		High
    Cost
    Cost inflation per tonne
    ₹100
    		Medium
    Debt
    Land monetization proceeds
    ₹150 crores
    		High
    Market Demand
    South India demand growth
    8% to 10%
    		Medium
    Capacity Utilization
    Andhra Cements capacity utilization
    60%
    		Medium
    Cost Savings
    WHRS savings at Gudipadu
    ₹25 per ton
    		High

    What to watch in Q2 FY27

    5

    Andhra Cements 0.75 MTPA expansion completion

    Q2 FY27
    CurrentLikely to be completed before end of current quarter (Q2 FY27)
    TargetCommercial operation of 0.75 MTPA expansion

    Why it matters

    This expansion will contribute to increased capacity and volumes, impacting future revenue and market share.

    The 0.75 million tonne cement capacity expansion at Andhra Cements, is likely to be completed before the end of this current quarter.

    Risks & concerns

    5
    RiskSeverity

    Elevated input prices (energy, fuel, packaging) due to geopolitical tensions

    Profitability and margins moderated in Q1 due to elevated input prices amid geopolitical tensions in West Asia. — Management acknowledged

    high

    Temporary demand impact from heatwave and election-related labor shortages

    Growth in Q1 was temporarily impacted by heatwave and election-related labor shortages affecting construction activity. — Management acknowledged

    medium

    Moderated pricing momentum due to competitive intensity and regional market dynamics

    Pricing momentum moderated towards the end of Q1, resulting in broadly stable to marginally improved realization sequentially. — Management acknowledged

    medium

    Seasonally difficult Q2 due to rains, shutdowns, and higher maintenance costs

    Q2 is expected to see operational metrics under stress due to seasonal factors and planned maintenance, leading to higher costs. — Management acknowledged

    medium

    Volatility in demand and competitive intensity affecting ability to sustain price hikes

    Prices did not hold up due to month-to-month demand volatility and competitive intensity, though management believes prices are bound to go up. — Management acknowledged

    medium

    Q&A highlights

    8

    “So, the 7 million tonne is excluding the clinker sale. As far as clinker sale is concerned, there are two aspects. One is to the outside and one within the Group company. I think Andhra will continue to sell clinker to Bayyavaram. And at Jeerabad, till the volume stabilises, which we expect the ramp-up to happen ASAP, but till such time, we continue to sell some portion of clinker.”

    Clarifies the scope of the 7 MT volume guidance and provides insight into clinker sales strategy, particularly from new/ramping-up units.

    asked by Shravan Shah

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 FY27 Performance Overview

    Sagar Cements reported a robust 13% year-on-year volume growth and a 5% increase in revenue for Q1 FY27, driven by resilient demand across key markets. However, profitability was impacted by elevated input costs and competitive pricing, leading to an EBITDA per tonne of ₹451 and a net loss of ₹28 crore for the quarter. The company acknowledged temporary demand moderation due to heatwaves and election-related labor shortages, which affected construction activity.

    02

    Operational Enhancements and Capacity Expansion

    The company successfully commissioned the remaining 1.55 MW Waste Heat Recovery System (WHRS) at its Gudipadu plant, bringing the total installed WHRS capacity there to 4.35 MW. Additionally, a 0.5 million tonne per annum (MTPA) capacity expansion at the Jeerabad unit was completed. The 0.75 MTPA cement capacity expansion at Andhra Cements is expected to be completed by the end of Q2 FY27, further enhancing manufacturing footprint and operating efficiencies.

    03

    Cost Dynamics and Profitability Outlook

    Input costs, particularly power and fuel, increased to ₹1,484 per tonne in Q1 FY27 from ₹1,450 in Q1 FY26, primarily due to geopolitical tensions. The company anticipates a full-year cost inflation of approximately ₹100 per tonne but expects to offset this through ongoing cost optimization initiatives, including WHRS and plant efficiency improvements. Management projects a full-year FY27 EBITDA per tonne of ₹500-550, banking on stable prices and cost savings from new projects.

    04

    Market Demand and Regional Trends

    Demand remained broadly healthy, especially in the South, which constitutes 80% of the company's footprint. AP and Telangana showed strong performance, and Tamil Nadu demand picked up post-elections. The company expects overall South India demand to grow by 8-10% for FY27. Despite some month-to-month volatility and competitive intensity, management believes prices are fundamentally poised to increase due to underlying cost inflation.

    05

    Capital Structure and Debt Management

    As of June 30, 2026, gross debt stood at ₹1,704 crore, with a debt-to-equity ratio of 0.78:1, and cash balances of ₹105 crore. The company projects net debt to reduce from ₹1,565 crore to ₹1,159 crore, primarily driven by the monetization of Vizag land assets, expected to generate ₹150 crore in FY27 and an additional ₹200 crore in FY28. No major growth capex is planned for the next two years, with a focus on debt reduction and operational maintenance.

    06

    Andhra Cements Integration and Utilization

    The acquired Andhra Cements unit, which started from sub-30% utilization, has ramped up smoothly to nearly 50% and is targeted to reach 60% by the end of FY27, and 60-70% in subsequent years. While Andhra's variable cost is about ₹125 per tonne higher than Mattampally due to reliance on grid power instead of WHRS, the company plans to implement WHRS there in the coming years to improve efficiency and reduce this cost differential.

    This is an AI-generated summary of a publicly available earnings call transcript.