This article first appeared on GuruFocus .
Release Date: July 28, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Improved EBITDA margin by 331 basis points to 16.7% and EBITDA per ton of Rs 931.
-
Net operating costs reduced by Rs 206 per metric ton sequentially to Rs 4,241.
-
Trade sales share improved from 74% to 78%, with premium products comprising 34% of trade sales.
-
Green power capacity increased to 973 MW, reducing power cost from Rs 5.9 to Rs 4.9 per KWH.
-
Capacity expansion on track with 10.2 million tons added, targeting 119 million tons by year-end.
Negative Points
-
Overall volumes declined 7% year-on-year due to a strategic reduction in low-margin non-trade sales.
-
Net sales realization (NSP) growth was among the lowest in the industry, impacted by accounting treatments and market disruptions.
-
Temporary suspension of manufacturing at some plants (approx. 3.5 million tons capacity) for optimization.
-
Geopolitical tensions in West Asia led to higher imported fuel prices and elevated freight costs.
-
RMC segment EBITDA margin fell sharply to 7% from 14-15% in prior quarters due to raw material pricing and accounting factors.
Q & A Highlights
Here are the key highlights from the Orient Cement Ltd ( BOM:535754 ) earnings call transcript, focusing on the most significant Q&A exchanges.
-
Warning! GuruFocus has detected 5 Warning Signs with BOM:535754.
-
Is BOM:535754 fairly valued? Test your thesis with our free DCF calculator.
Q: The company's focus on "value over volume" led to a 7% year-on-year volume decline in Q1, with trade volumes down 2% and non-trade down 21%. Given this strategy, is it fair to assume a very muted volume growth for the full year FY27, especially against the previous guidance of ~80 million tonnes? A: (Vinod Baheti, CEO) No, we are confident in our 8% volume growth guidance for the full year. The Q1 decline was a calculated move to improve profitability, which resulted in a significant EBITDA improvement of ~Rs 260 per ton. The focus on trade is already yielding results, with July showing an 8% year-on-year growth in trade volumes. The strategy is to recoup the lost market share in the remaining nine months, particularly on the trade side, where we have sustained and improved our market share.
Q: The company reported a sequential cost reduction of Rs 206 per ton, but the presentation shows power and fuel costs moving up. Where exactly did this saving come from? A: (Vinod Baheti, CEO) The Rs 206 reduction came from a combination of factors: efficient sourcing of fly ash, benefits from renewable energy (RE) power which lowered the per-unit power cost, a 3% reduction in the clinker factor, and logistics optimization. Importantly, this Rs 206 saving was achieved *after* absorbing an estimated Rs 110 per ton impact from the West Asia geopolitical escalation. The gross savings were actually around Rs 316 per ton.
Q: The company sold 45 crore units of green power in Q1. As you plan to consume this power internally in the coming quarters, what is the incremental EBITDA gain we should expect? A: (Vinod Baheti, CEO) The benefit of consuming the power internally is significantly higher than selling it. Our blended grid power cost is around Rs 7-8 per unit, while the green power cost is much lower. Therefore, replacing grid power with our own green power will provide a substantial cost advantage. We expect to consume 50% of the sold units in Q2 itself, and the ultimate goal is to consume nearly all of it in-house, with only a small surplus (around 10%) being sold.
Q: The company has temporarily suspended manufacturing at some facilities. Can you provide details on which facilities and the total capacity involved? A: (Vinod Baheti, CEO) The temporary suspension involves approximately 3.5 million tons of annual capacity. These are very old facilities, some from ACC and one from an acquired company. This is not a permanent mothballing but a temporary closure for 6 months to undertake a thorough optimization plan, including efficiency improvements, WHRS, AFR investments, and cost restructuring. We have alternate supply plants to service the market in the interim.
Q: The company's net sales realization (NSP) improvement was one of the lowest in the industry despite a higher focus on trade sales. What is driving this? A: (Vinod Baheti, CEO) The NSP is impacted by accounting treatments, such as netting off certain expenditures that other companies may not. Additionally, the increase in "ex-works" commercial terms can impact the reported NSP. The key focus remains on cost leadership, which is within our control. We are confident that as our brand equity and premiumization strategy gain further traction, our NSP journey will improve in line with the industry.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
