Sagar Cements Limited — Q3 FY26 earnings call

Call held 22 Jan 2026

Management summary

Sagar Cements reported a 5% YoY revenue increase to ₹591 crore in Q3 FY26, supported by 8% volume growth, but recorded a loss after tax of ₹64 crore with flat EBITDA. The company is focused on cost efficiencies through project commissioning and land monetization to reduce its ₹1,627 crore gross debt, while maintaining an optimistic volume outlook for FY26 and FY27.

Highlights

  • Revenue increased by 5% YoY to ₹591 crore in Q3 FY26, driven by an 8% YoY volume growth.

  • Power and fuel costs decreased to ₹1,408 per tonne in Q3 FY26 from ₹1,456 per tonne in Q3 FY25, and freight costs also slightly reduced.

  • The 6-stage preheater at Dachepalli plant (Andhra Cements) was successfully commissioned, expected to reduce costs by ₹250 per tonne YoY.

  • The company expects to monetize Vizag land for a net of ₹350 crore over 18 months, primarily for debt reduction.

  • FY26 volume guidance was revised upwards from 5.8 million to 6 million tonnes, with FY27 target at 7 million tonnes.

Concerns

  • The company reported a loss after tax of ₹64 crore in Q3 FY26.

  • EBITDA for Q3 FY26 remained flat at ₹38 crore, resulting in a flat EBITDA per tonne of ₹254.

  • Gross debt stood at ₹1,627 crore as of December 31, 2025, with a debt-equity ratio of 0.78:1.

  • Management anticipates potential pricing pressure in March (Q4 FY26) which has been penciled into internal forecasts.

  • Trade prices in January 2026 saw only a ₹5-10 increase despite attempts for ₹15-20, indicating limited pricing power in that segment.

Key financials

  1. Revenue ₹591 Cr +4.8%YoY
  2. EBITDA ₹38 Cr 0%YoY
  3. EBITDA per tonne ₹254 0%YoY
  4. Loss after tax ₹-64 Cr
  5. Power and fuel costs per tonne ₹1,408 -3.3%YoY
  6. Freight cost per tonne ₹830 -0.6%YoY

What they filed

Q1 FY27: revenue up 5.2%, net profit down 500.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue475 564 658 671 602 +27%591 +5%787 +20%706 +5%
EBITDA20 38 37 121 51 +155%38 +0%82 +122%72 −40%
Net profit-57 -54 -73 7 -44 +23%-64 −19%100 +237%-28 −500%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹489 Cr
    • 6-stage preheater at Dachepalli plant (Andhra Cements)
    • 4.35-megawatt Waste Heat Recovery project at Gudipadu unit
    • Expansion of Jeerabad capacity from 1 million to 1.5 million tonne
    • Cement capacity addition at Dachepalli
    Our projects at Andhra Cements and Jeerabad are progressing as per plan. The construction of the 6-stage preheater at Dachepalli plant of Andhra Cements has been successfully completed and was recently commissioned. 4.35-megawatt Waste Heat Recovery project at the Gudipadu unit is expected to be commissioned by end of FY 2026. We also expect to commission the expansion of Jeerabad capacity from 1 million to 1.5 million tonne by early part of Q1 FY 2027, and the cement capacity addition at Dachepalli by August 2026. ... For the total FY 2026, it is around ₹489 crore. And for the coming year, what is budgeted is around ₹291 crore.
  • Debt Gross ₹1,627 Cr · Net ₹1,450 Cr
    As far as the key balance sheet items are concerned, gross debt as on 31 December, 2025 stood at ₹1,627 crore, out of which ₹1,320 crore as a long-term debt and the remaining constitutes the working capital. Net worth of the company on a consolidated basis as on 31st December 2025 stood at ₹1,694 crore. Debt equity ratio stands at 0.78:1. Cash and bank balances were at ₹83 crore as on 31 December, 2025. ... Yeah, the net debt is around ₹1,450 crore. That's what we expect by end of this financial year.
  • Liquidity Cash ₹83 Cr
    Cash and bank balances were at ₹83 crore as on 31 December, 2025.

Guidance & targets

Volume

  • Overall volumes Volume · FY26 · High confidence 6 million tonnes

    Previously 5.8 million tonnes → 6 million tonnes

    I think the numbers what we had discussed during the last quarter call, they more or less hold good. We could be slightly better. But as we speak, the demand uptick has been extremely strong. So the numbers what we have committed, I think they are holding as discussed. ... Now let us talk of the current financial year's outlook, it is 6 million. And we did indicate in the past that these are subject to some corrections basis the price. The price has been volatile. So basis that, from 5.8 million, we re-revised it to 6 million.

    — Sreekanth Reddy

  • Overall volumes Volume · FY27 · High confidence 7 million tonnes
    Going to the next year number, yeah, we are holding at this point of time for a 7 million outlook for the coming financial year.

    — Sreekanth Reddy

Profitability

  • EBITDA per tonne Profitability · Q4 FY26 · High confidence ₹550
    Given the scenario, what we have pencilled in for the Q4 is around ₹550 EBITDA per tonne.

    — Sreekanth Reddy

  • EBITDA per tonne Profitability · FY26 · High confidence ₹500-₹525
    In all, we should end up very close to ₹500 odd EBITDA per tonne to ₹525 EBITDA per tonne for the full financial year. That includes the incentives.

    — Sreekanth Reddy

Cost Reduction

  • Cost reduction at Andhra Cements Cost Reduction · YoY · High confidence ₹250 per tonne
    All in all, from a year-on-year kind of a number, you should expect around 250 per tonne kind of a reduction at Andhra.

    — Sreekanth Reddy

  • Net saving from Gudipadu WHRS Cost Reduction · High confidence ₹100-125 per tonne
    One on the waste heat recovery. As you know, it's a 4.35 megawatt which would roughly translate to a net saving of around ₹100 to ₹125 per tonne at Gudipadu unit, up to clinkerisation.

    — Sreekanth Reddy

  • Saving from Jeerabad grinding mill Cost Reduction · High confidence ₹150-200 per tonne
    So that should help us have some operating leverage because Jeerabad is already operating close to 100%. So that should, again, on a fixed cost basis, should help us save a minimum of ₹150 to 200 per tonne.

    — Sreekanth Reddy

  • Saving from Andhra grinding plant Cost Reduction · High confidence ₹25-50 per tonne
    We expect four to five unit's kind of a reduction on close to 1 million tonne of sale per half year, sir. So, 0.5 million into four units is what we should factor. That should be around ₹25 to ₹50 per tonne kind of saving is what we should expect at Andhra.

    — Sreekanth Reddy

Project Commissioning

  • Gudipadu WHRS commissioning Project Commissioning · end of FY 2026 · High confidence Commissioned
    4.35-megawatt Waste Heat Recovery project at the Gudipadu unit is expected to be commissioned by end of FY 2026.

    — Sreekanth Reddy

  • Jeerabad capacity expansion commissioning Project Commissioning · early part of Q1 FY 2027 · High confidence Commissioned
    We also expect to commission the expansion of Jeerabad capacity from 1 million to 1.5 million tonne by early part of Q1 FY 2027

    — Sreekanth Reddy

  • Dachepalli cement capacity addition commissioning Project Commissioning · August 2026 · High confidence Commissioned
    and the cement capacity addition at Dachepalli by August 2026.

    — Sreekanth Reddy

Fuel Price

  • Fuel price increase Fuel Price · FY27 · Medium confidence 2-3%
    For the coming year, as it stands, we expect around 2% to 3% kind of an increase at the fuel price.

    — Sreekanth Reddy

Capex

  • Total CapEx Capex · FY26 · High confidence ₹489 crore
    For the total FY 2026, it is around ₹489 crore.

    — Sreekanth Reddy

  • Total CapEx Capex · FY27 · High confidence ₹291 crore
    And for the coming year, what is budgeted is around ₹291 crore.

    — Sreekanth Reddy

Debt

  • Net debt Debt · end of this financial year · High confidence ₹1,450 crore
    Yeah, the net debt is around ₹1,450 crore. That's what we expect by end of this financial year.

    — Sreekanth Reddy

  • Debt-equity ratio Debt · 18 to 24 months · Medium confidence 0.5

    From 0.78:1 today

    Okay. So let's say we retire this and we have some cash flow, so about debt equity then should come closer to 0.5, let's say, in 18 to 24 months' time frame.

    — Sreekanth Reddy

Capacity

  • Medium-term capacity objective Capacity · High confidence 12 million tonnes
    Yes. From our medium-term plan, our objective is to be 12 million.

    — Sreekanth Reddy

  • Long-term capacity objective Capacity · Medium confidence 15 million tonnes
    From increasing it from 12 million to 15 million, but the CapEx should start somewhere around end of FY 2028 to early part of FY 2029.

    — Sreekanth Reddy

What to watch in Q4 FY26

Andhra Cements profitability

next quarter
Current Close to breakeven in Q3 FY26
Target Profitable in Q4 FY26

Why it matters

Andhra Cements' turnaround is a key driver for overall company profitability and cost reduction.

I think in the current quarter itself, we expect Andhra to break even. With the better prices, we hope it should become profitable in the current quarter itself.

Risks & concerns

  • Potential pricing pressure towards year-end (March)

    medium

    Management has factored potential pricing pressure in March into Q4 FY26 EBITDA guidance, suggesting caution.

    Management acknowledged

  • Limited pricing power in the trade segment

    medium

    Despite attempts for ₹15-20 price hikes in trade, only ₹5-10 was realized in January, indicating resistance.

    Management acknowledged

  • Competitor capacity additions in Andhra Pradesh

    low

    Ramco's Kolimigundla Line-2 and UltraTech's Line-4 are expected in FY27, potentially increasing regional supply, though not much is expected in the next 6-12 months.

    Analyst acknowledged

Q&A highlights

8 direct
Demand outlook for various states in South India for FY26 Direct
Yeah, good morning Shravan. I think the numbers what we had discussed during the last quarter call, they more or less hold good. We could be slightly better. But as we speak, the demand uptick has been extremely strong. So the numbers what we have committed, I think they are holding as discussed.

Confirms the continued strong demand outlook for key operating regions, indicating positive market conditions.

Asked by Shravan Shah

Revised volume guidance for FY26 and FY27 Direct
Now let us talk of the current financial year's outlook, it is 6 million. And we did indicate in the past that these are subject to some corrections basis the price. The price has been volatile. So basis that, from 5.8 million, we re-revised it to 6 million. ... Going to the next year number, yeah, we are holding at this point of time for a 7 million outlook for the coming financial year.

Provides updated volume targets, showing an upward revision for FY26 and a clear target for FY27, crucial for revenue projections.

Asked by Shravan Shah

Pricing trends in January 2026 across non-trade and trade segments Direct
From the middle to end of December, we started increasing the prices. From end of December to now, yeah, we did get around ₹15 to ₹20 increase on the non-trade. Though at the trade level, the price increase, we started increasing only during the first week of January. But in this part of the world, as you know, Pongal is an important festival. We tried increasing almost ₹15 to 20. But so far, we could only realise anywhere between ₹5 to ₹10 in trade.

Details the company's ability to implement price hikes, highlighting better realization in non-trade vs. trade segments and regional variations.

Asked by Shravan Shah

EBITDA per tonne outlook for Q4 FY26 and full FY26 Direct
Given the scenario, what we have pencilled in for the Q4 is around ₹550 EBITDA per tonne. In all, we should end up very close to ₹500 odd EBITDA per tonne to ₹525 EBITDA per tonne for the full financial year. That includes the incentives.

Gives specific profitability targets, indicating management's confidence in margin improvement for the upcoming quarter and the full fiscal year.

Asked by Shravan Shah

Cost structure and path to profitability for Andhra Cements post preheater commissioning Direct
All in all, from a year-on-year kind of a number, you should expect around 250 per tonne kind of a reduction at Andhra. ... So given this situation, fortunately, in the last quarter itself, we are very close to the breakeven. I think in the current quarter itself, we expect Andhra to break even. With the better prices, we hope it should become profitable in the current quarter itself.

Explains the significant cost savings expected from recent capex and the timeline for Andhra Cements to become profitable, a key turnaround story.

Asked by Rajesh Ravi

Details of Vizag land monetization, value, timeline, and utilization of proceeds Direct
Good morning, the government reckoner rate at this point of time is around 4 crore per acre, which roughly translates to ₹400 crore. But there would be some expenditure, as you know, and also some capital gain. So we are assuming that we should receive around ₹350 crore net of the expenses that we might incur. ... Our plan is to have a balanced and optimised debt. So for the next two to three years, we do not have large CapEx plans. So most of the money should be utilised to retire the debt.

Provides concrete financial details on a non-core asset sale, its expected net proceeds, and the strategic use of funds for debt reduction.

Asked by Jaspreet Singh

CapEx plans for FY26 and FY27 Direct
Since you've asked, yeah, it's around ₹303 crore for the nine months that we have done and we have budgeted around ₹186 crore for Q4. For the total FY 2026, it is around ₹489 crore. And for the coming year, what is budgeted is around ₹291 crore.

Clarifies the company's capital expenditure plans for the current and next fiscal year, indicating a moderate capex cycle.

Asked by Satyam Kesarwani

Impact of various cost reduction initiatives (WHRS, grinding mills) on per tonne savings Direct
One on the waste heat recovery. As you know, it's a 4.35 megawatt which would roughly translate to a net saving of around ₹100 to ₹125 per tonne at Gudipadu unit, up to clinkerisation. ... So that should help us have some operating leverage because Jeerabad is already operating close to 100%. So that should, again, on a fixed cost basis, should help us save a minimum of ₹150 to 200 per tonne.

Quantifies the expected per-tonne savings from ongoing and upcoming efficiency projects, providing clear drivers for future margin improvement.

Asked by Shravan Shah

2 min read 6 chapters

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.

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