This article first appeared on GuruFocus .
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Fiscal Period:Q1 FY27, quarter ended June 30, 2026.
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Revenue:No specific revenue figures were mentioned in the earnings call.
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Earnings:No specific earnings figures were mentioned in the earnings call.
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Margins:No specific margin figures were mentioned in the earnings call.
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Cash Flow:No specific cash flow figures were mentioned in the earnings call.
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Expenses:No specific expense figures were mentioned in the earnings call.
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Same-Store Sales:Not applicable or mentioned in the earnings call.
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Store Locations:Not applicable or mentioned in the earnings call.
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Release Date: August 06, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Realization improved by ~9% sequentially, driven by price increases in non-trade segments and a favorable geographic mix shift.
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Lead distance reduced by 20 kilometers, contributing to cost savings and improved operational efficiency.
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Renewable energy share reached 49% of total energy consumption, with ongoing projects expected to further increase this percentage.
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New solar power project (42 MW) through an SPV is expected to deliver cost savings of INR 1.65 per unit, with a payback period of less than 2 years.
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Cement volume grew 8% year-on-year, with clinker utilization at a high 95%.
Negative Points
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Fuel costs increased sequentially to INR 1.65 per kilocalorie, with expectations of further rise to INR 1.8-1.85 in Q2 FY27.
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Packaging costs are rising due to higher granule prices, adding INR 3.5-4 per bag in Q2.
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Raw material costs inflated due to temporary fly ash procurement from alternative sources and higher gypsum costs.
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Q2 FY27 margins are expected to be impacted by seasonal demand weakness, maintenance shutdowns, and cost inflation, with limited ability to pass through price increases.
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Proxy advisory firms recommended negative votes on some resolutions, creating governance-related uncertainty despite resolutions passing.
Q & A Highlights
Q: Can you explain the sharp 9% sequential increase in cement realization, given that trade prices were largely stable? A: Arun Shukla, President and Executive Director, attributed the increase to a combination of factors: price hikes in non-trade segments across markets like Gujarat, Mumbai, and the East, along with some trade price increases in the West and East. The most significant impact came from a strategic shift in geographic mix, focusing sales on core markets. This is evidenced by a 20-kilometer reduction in average lead distance, which alone contributed INR 60-70 per tonne to realizations.
Q: What is the current status of the company's capital expenditure plans and the Durg expansion project? A: Sudhir Bidkar, CFO, stated that INR 300 crores was spent in Q1 FY27, with a total of INR 400 crores spent on the Durg expansion to date. The company's CapEx guidance is INR 1,500 crores for FY27, INR 2,000 crores for FY28, and INR 1,500 crores for FY29. This guidance includes the Durg and Northeast expansions but excludes land acquisition costs for the future Kutch and Nagore projects.
Q: What is the outlook for input costs in Q2 FY27, particularly fuel and packaging? A: Arun Shukla indicated that cost pressures are intensifying. Fuel costs, which rose from INR 1.54 to INR 1.65 per Kcal in Q1, are expected to increase further to INR 1.80-1.85 per Kcal in Q2. Additionally, packaging costs are rising due to a spike in granule prices, adding an estimated INR 3.5-4 per bag. He noted that passing these costs on to customers is necessary but may be challenging due to seasonal demand cyclicity.
Q: How is the company's strategy on geographic mix impacting its market presence, and is this a sustainable approach? A: Arun Shukla clarified that the shift is a systematic, long-term strategy rather than a reactive measure. The company is focusing on its core markets (Gujarat, Rajasthan, Chhattisgarh, Haryana, and parts of Western UP), which now account for ~90% of sales. During high-demand periods, the company maximizes presence in these profitable core markets, while in leaner months, it may expand its footprint further afield to utilize capacity.
Q: Can you provide details on the company's renewable energy capacity and future plans? A: Arun Shukla reported that renewable energy currently constitutes 49% of total energy consumption. The installed capacity includes 129 MW of solar, 45 MW of waste heat recovery (WHR), and 4 MW of wind. The company is actively working on new projects to further improve this percentage over the next 6-8 months.
Q: What is the company's strategy regarding the trade versus non-trade sales mix? A: Arun Shukla stated that while the company's non-trade share is high at 41%, the focus will continue to be on increasing the trade segment. This is because trade sales predominantly involve blended cement, which offers better equivalent realizations and margins when considering the clinker factor. However, he acknowledged that regional nuances require a differentiated strategy for trade and non-trade in different markets.
Q: What is the progress on the Northeast expansion project, and what are the current challenges? A: Arun Shukla confirmed the project is back on track. The company has acquired mines through auctions and is in various stages of obtaining environmental clearances. Land acquisition for the plant is underway. He mentioned a Public Interest Litigation (PIL) filed by nearby villages in the Guwahati High Court regarding land ownership, which is a common hurdle in such projects. The company expects to provide more concrete updates upon achieving key milestones.
Q: What is the company's target for net debt-to-EBITDA while pursuing its 30 million tonne capacity goal by FY30? A: Arun Shukla stated that the company aims to maintain a net debt-to-EBITDA ratio of 2.5x, with an absolute maximum of 2.75x. While the aggressive expansion plan may push the ratio towards that upper limit around FY29-30, the company will proceed as long as there is a clear roadmap for deleveraging thereafter.
Q: Can you explain the reasons behind the increase in raw material costs during the quarter? A: Arun Shukla attributed the increase to several factors: a temporary rise in fly ash procurement costs due to annual shutdowns at thermal plants, higher costs for gypsum due to availability issues, and increased raw material requirements from the growing non-cement (SBS) business. Additionally, higher diesel prices and participation in fly ash auctions contributed to the overall cost inflation.
Q: What is the rationale behind setting up a 28-megawatt battery energy storage system for the recently acquired SCLC? A: Arun Shukla explained that the battery storage is for demand-supply balancing. It allows the plant to store excess power generated from its captive solar source, preventing wastage and ensuring that no unit of energy is lost to the grid. This optimizes the use of renewable energy and maximizes cost savings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
