Detailed Narrative
Q3 FY26 Performance Overview
Sagar Cements reported a revenue of ₹591 crore in Q3 FY26, marking a 5% year-on-year increase, primarily driven by an 8% growth in volumes. Despite this, the company's EBITDA remained flat at ₹38 crore, resulting in an EBITDA per tonne of ₹254, consistent with the previous year. The quarter concluded with a loss after tax of ₹64 crore, indicating challenges in profitability despite top-line growth.
Cost Efficiency Initiatives and Impact
The company is actively pursuing cost reduction through various initiatives. Power and fuel costs per tonne decreased to ₹1,408 in Q3 FY26 from ₹1,456 in Q3 FY25, while freight costs also saw a marginal reduction to ₹830 per tonne. The recently commissioned 6-stage preheater at Dachepalli is expected to yield a significant cost reduction of ₹250 per tonne year-on-year at Andhra Cements, which is anticipated to become profitable in Q4 FY26 after being near breakeven in Q3.
Capacity Expansion and Project Timelines
Sagar Cements is progressing with its expansion projects. The 4.35-megawatt Waste Heat Recovery project at Gudipadu is slated for commissioning by the end of FY26, promising ₹100-125 per tonne savings. The Jeerabad capacity expansion from 1 million to 1.5 million tonnes is expected by early Q1 FY27, and cement capacity addition at Dachepalli by August 2026. These projects are part of a broader strategy to enhance operational efficiency and capacity.
Volume and Pricing Outlook
The company revised its FY26 volume guidance upwards to 6 million tonnes from 5.8 million tonnes, projecting a 9% year-on-year growth. For FY27, the volume target is set at 7 million tonnes. In terms of pricing, non-trade segments saw an increase of ₹15-20 from December to January, while trade prices realized a more modest ₹5-10 increase. Management expects Q4 FY26 EBITDA per tonne to be around ₹550, contributing to a full-year FY26 EBITDA per tonne of ₹500-₹525.
Debt Management and Land Monetization
As of December 31, 2025, Sagar Cements reported a gross debt of ₹1,627 crore and a debt-equity ratio of 0.78:1. The company plans to monetize its Vizag land, expecting a net realization of approximately ₹350 crore over the next 18 months. These proceeds are primarily intended for debt retirement, with a target to bring the net debt to around ₹1,450 crore by the end of FY26 and the debt-equity ratio closer to 0.5 within 18-24 months, as no major CapEx is planned for the next 2.5-3 years beyond maintenance.
Capital Expenditure Plans
The total capital expenditure for FY26 is budgeted at ₹489 crore, with ₹303 crore already spent in the first nine months and ₹186 crore planned for Q4. For FY27, the budgeted CapEx is ₹291 crore. The company's medium-term objective is to reach 12 million tonnes capacity, with further expansion to 15 million tonnes planned with CapEx starting in late FY28 or early FY29, indicating a phased growth strategy.