# 1. Financial Performance ## A. Key Figures * **Clinker Sales:** **151,000 tonnes** (QoQ) * **Depreciation:** **₹85 Cr** (up from ₹78 Cr) * CAPEX: ₹260 Cr YTD · ₹400 Cr targeted for Q4 * Net Debt/EBITDA Target: 3–3.5x ## B. Revenue & Realizations * **Sharp Realization Pressure:** Cement realizations fell sharply due to **overexposure in non-trade-heavy markets**, where pricing corrections exceeded 10% amid weak demand post-GST reduction. * **Pricing Divergence:** Non-trade prices dropped significantly in key regions (e.g., Odisha, Chhattisgarh), while trade prices remained stable, preserving competitive positioning. * **Recovery Underway:** Non-trade prices have rebounded since January with increases of **₹10–15/unit** across most markets, supported by strong seasonal demand; trade price hikes expected ahead. * **Volume-Driven Strategy:** Management prioritized ramping new capacity in Q3, accepting near-term realization weakness to gain volume traction in expanding markets. ## C. Cost & Margin Trends * **Cost Discipline:** Employee expenses declined sequentially on the back of **productivity improvements** and structural optimization initiatives, despite rising headcount. * **Rising Fixed Charges:** Depreciation increased due to **Surat plant commissioning** and ongoing CAPEX, adding ~₹7–8 Cr in the quarter, signaling advancing asset base and future scale. ## D. Cash Flow & CAPEX * **CAPEX Execution on Track:** Spent ~₹400 Cr in the quarter, bringing YTD total to ₹260 Cr; most equipment ordered, with construction phase imminent. ## E. Balance Sheet & Leverage * **Leverage Framework Maintained:** Committed to **3 crore ton capacity target** and sustaining net debt/EBITDA within **3–5x range**, reflecting disciplined capital allocation. --- # 2. Volume & Sales Mix ## A. Key Figures * Clinker Sales: 7.23 lakh tons Q3 FY25 · 1.51 lakh tons Q3 FY26 * 9-Month Clinker Sales: 5.34 lakh tons FY26 ## B. Trade vs Non-Trade Dynamics * **Temporary Trade Dip, Rapid Recovery:** Trade share decline was short-lived and reversed in December–January, with volumes now exceeding prior levels amid signs of **trade price stabilization and upcoming increases**. * **Non-Trade Growth Pressured Realizations:** Strong non-trade volume expansion—especially in Gujarat and Mumbai post-Surat ramp-up—drove mix shift and contributed to pricing pressure, despite robust institutional demand for **blended cement (PPC) in Ready-Mix applications**. * **Regional Concentration Amplified Volatility:** Heavy exposure to Gujarat magnified the impact of trade segment softness, which was industry-wide but more acute for the company due to its regional footprint. ## C. Regional Sales Shifts * **Q2 Strength Across Key Markets:** Solid volume growth in Chhattisgarh, Rajasthan, Haryana, and Gujarat boosted performance despite lower realizations, with Gujarat’s rebound being a key driver. --- # 3. Capacity & Production ## A. Key Figures * **Clinker Utilisation:** **90%** (quarterly) * Clinker Production: 7.23 lakh tons consolidated (FY25) * **CAPEX (9M):** **₹350 Cr** total · **₹260 Cr** allocated to Durg expansion * Capacity Addition Target: 2.2 million tons by Mar 2027 · 2.4 million tons by Mar 2028 ## B. Plant Ramp-Up Status * **Surat Plant Driving Growth:** Commissioning of the Surat grinding station on 22nd September 2025 boosted Gujarat volumes and enabled non-trade supply, meeting strong regional demand through peak season. * **FY27 Volume Plan:** Growth to be supported by existing capacity headroom at **Surat, Udaipur, Jhajjar (Jharli), and Cuttack** plants, avoiding near-term greenfield dependency. * **Clinker Readiness:** 12-month clinker supply secured for new plant start-up by March next year; timeline under active monitoring. ## C. Expansion Timeline * **Durg Project on Track:** Full project completion targeted for March 2028, with Phase 2 by March 2027; Line-2 not expected before then and no external clinker sourcing in place. * **Execution Progress:** Durg brownfield expansion in progress over next 12–13 months with civil work and equipment ordering underway; **railway siding Phase 2** also scheduled for March 2028. * **Conveyor Belt Stalled:** Project remains in final stages with no update from prior quarter, indicating potential execution delay. --- # 4. Product & Segment Performance ## A. Key Figures * **Non-Cement Revenue:** **₹147 Cr** (Q) · **RMC:** **₹67 Cr** (Q) · **AAC Blocks:** **₹56 Cr** (Q) * **EBITDA Margin (Non-Cement):** **4%** (current) · **RMC:** **3–5%** · **AAC Blocks:** margin in between RMC and PoP ## B. Cement vs Non-Cement * **Non-Cement Margin Trajectory:** Margins expected to improve with Alwar plant ramp-up (white cement, putty), though **structural gap vs. core cement margins** to persist near term. * **Growth in Value-Added Segments:** RMC and AAC blocks represent core non-cement revenue drivers, with RMC benefiting from **value-added concrete push** and **productivity gains**. ## C. Ready Mix & AAC Blocks * **Margin Contextualized:** Despite low EBITDA margins, non-cement segments deliver **strong ROCE**, with returns competitive versus industry benchmarks. * **Path to Margin Expansion:** Margin improvement to come from **operational efficiencies**, **product mix shift** in RMC, and **geographic scaling of AAC blocks**. ## D. Blended Cement Mix * **Cost Optimization Focus:** Declining CC ratio reflects successful shift toward blended cement; further improvement targeted via **increase in blended mix from 62% to 67%**. --- # 5. Input Costs & Inflation ## A. Key Figures * **Input Costs:** **₹150/ton** reduction QoQ * **Freight Costs:** **>₹100/ton** decline QoQ * Power Cost: **₹5.37/unit** (vs. ₹5.52/unit prior) * Fuel Cost (Q3): ₹720/1,000 kcal (₹1.56/kcal) ## B. Fuel & Pet Coke Trends * **Near-Term Cost Pressure:** Fuel costs rising due to higher pet coke and coal prices, with a **58–60 price increase expected in Q4** on exhausted stock and elevated procurement costs. * **Stable Energy Inputs:** Despite lower input costs overall, fuel prices remained stable at **₹4–6/unit**, and green power mix held steady without impact from reduced clinker production. ## C. Power & Freight Costs * **Significant Freight Decline:** Sharp drop in freight costs driven by **higher ex-factory non-trade sales**, reducing transportation volume and logistics burden. * **Lower Power Spend:** Sequential power cost reduction contributed materially to lower input costs, despite no change in consumption linked to clinker output. ## D. Cost Reduction Efforts * **Productivity-Focused Discipline:** Cost savings driven by operational efficiency—not headcount or wage reductions—with continued emphasis on **improving productivity** in expanding operations like Surat and Ready Mix. * **Stable Payroll Outlook:** Employee costs expected to stabilize as expansion offsets any further reduction, signaling maturity in cost optimization cycle. --- # 6. Risks & Market Volatility ## A. Regional Demand Risks * **Geographic Concentration Risk:** Exposure to **Gujarat** and limited presence in the North (Rajasthan, Haryana, West UP) heightens realization volatility versus peers with diversified footprints. * **Regional Vulnerability:** Key operations in **Chhattisgarh and neighboring states** amplify sensitivity to local market swings, with limited offset from other regions. * **Stabilizing Trends:** Market conditions show early signs of stabilization over the past 2–3 months, though recovery remains uneven. ## B. Pricing Competition * **Post-GST Price Disruption:** A sharp decline in realizations after the September 22 GST reduction caused market confusion and shifted demand toward the **non-trade segment**. * **Pricing Uncertainty:** Management declined to quantify current realizations due to early-quarter volatility and ongoing price pass-through ambiguity. * **Downward Pressure Ahead:** Despite recent price gains, **March rollback risks** loom amid rising capacity additions and volume-driven competition. * **Valuation Sensitivity:** **Price swings of ₹200–400** materially alter analyst valuations, increasing rating volatility in the near term. ## C. Labour & Execution Risks * **Seasonal Labour Disruption:** Diwali-related worker exodus, extended rains, and **Bihar elections** caused temporary labour shortages, suppressing trade volume. * **Delayed Site Resumption:** Construction activity only resumed post-elections, constraining trade demand for the period. --- # 7. Guidance & Outlook ## A. Key Figures * **CAPEX FY27:** **₹1,600–1,700 Cr** (target) * Durg Project CAPEX: ₹3,000 Cr (confirmed) · ₹170 Cr balance to be incurred for Line-2 * **Maintenance CAPEX:** **₹50 Cr/year** (clarified) ## B. Volume & Pricing Forecast * **Pricing Recovery Underway:** Realizations expected to rebound in Q4 on **rising prices and volumes**, recovering prior quarter losses amid strong demand momentum. * **Trade-Non-Trade Convergence:** Fuel cost pass-through and demand strength to drive **trade price increases**, narrowing the gap with higher-performing non-trade segment. * **Sustained Pricing Momentum:** Non-trade prices already improved over 5 months; further gains expected across both channels as cost pressures persist. ## C. CAPEX Plan by Year * **Durg Line-2 Execution:** Minimal spend in first 9 months; **balance of ₹400 Cr** to be deployed in current quarter, aligning with project timeline. * **Conveyor Belt Project Stalled:** **₹170 Cr** component excluded from active CAPEX due to land acquisition delays; total investment remains **₹3,000 Cr** if unresolved. ## D. Margin Improvement Path * **Cost Discipline in Focus:** Employee costs guided at **₹120–150 Cr**, with productivity initiatives key to controlling inflationary pressures. * **Non-Cement Margin Timeline:** Meaningful margin expansion in non-cement businesses expected only after **2+ years** of operational stabilization.