# 1. Financial Performance ## A. Key Figures * **Revenue:** **₹591 Cr** (+5%) * **Volume:** **+8% YoY** * **EBITDA:** **₹38 Cr** (flat) · **₹254/tonne** (Q3) * **9M EBITDA per tonne:** **₹478/tonne** (vs. target of ₹600+) * **Gross Debt:** **₹1,627 Cr** (₹1,320 Cr long-term) * **Net Worth:** **₹1,694 Cr** * **Cash & Bank Balances:** **₹83 Cr** * **Net Debt (FY-end projection):** **₹1,450 Cr** ## B. Revenue & Volume * **Resilient Volume Growth:** Cement volumes rose at a strong pace despite muted pricing, reflecting healthy demand and market share gains. * **Revenue-Margin Decoupling:** Top-line expansion outpaced input cost inflation, though **flat EBITDA** indicates limited margin conversion in Q3. ## C. EBITDA & Margins * **Profitability Recovery in Progress:** Full-year EBITDA per tonne expected to reach **₹500–525**, supported by Q4 improvement to **₹550/tonne**, despite missing initial ₹600+ target. * **Cost Pressures Weighing:** Below-target margins attributed to delayed price realization and **elevated depreciation** from recent CapEx ramp-up. * **Operating Leverage Building:** All units expected to contribute to margin recovery, led by Andhra Cements’ turnaround and scale benefits. ## D. Balance Sheet * **Debt Reduction Focus:** Proceeds prioritized for **net debt reduction**, targeting ₹1,450 Cr by FY-end, with debt-to-equity at **78:1** signaling moderate leverage. * **Stable Liquidity Profile:** Cash balance of ₹83 Cr supports near-term obligations, while finance costs remain stable at **~₹50 Cr/quarter**. --- # 2. Volume & Demand Trends ## A. Key Figures * Full-Year Volume Target: 6 million tonne (revised up from 5.8 million) * **Regional Growth Guidance (FY26):** High-single-digit (AP & TS) · Flat to marginal (TN) · **3–5%** (KA) ## B. Regional Demand * **Near-Term Softness:** Subdued 3Q demand, especially in first half, due to extended monsoons impacting construction activity. * **Stable Outlook:** Full-year regional growth expectations unchanged, with strongest momentum anticipated in Andhra Pradesh and Telangana. ## C. Pricing Realization * **Selective Price Discipline:** Implemented ₹15–20 hikes in non-trade segments across South India and ₹10 in MP; trade segment realizations lagged due to Pongal, capturing only ₹5–10. * **Cautious Stance on Sustainability:** Current prices below Q1 highs; management assumes only moderate improvement, with uncertainty on post-March sustainability despite March capacity additions. --- # 3. Cost Structure & Efficiency ## A. Key Figures * **Power and Fuel Cost:** **₹1,408/tonne** (↓ from ₹1,456) · **Freight Cost:** **₹830/tonne** (↓ from ₹835) * **Operating Cost:** **₹4,800/tonne** at Andhra Cement · **₹3,900/tonne** stand-alone (Jajpur & Gudipadu) * **Cost Reduction Target:** **₹250/tonne** YoY gain at Andhra Cement post-preheater commissioning ## B. Fuel & Power Strategy * **Fuel Mix Shift:** Transition from pet coke to Indian and imported coal to counter **~15% fuel cost inflation** and enhance cost resilience. * **Stable Input Outlook:** Power and fuel costs expected to remain flat this quarter, with savings limited to operational efficiencies. ## C. Plant-Level Cost Dynamics * **Cost Convergence Underway:** Andhra Cement’s high operating cost reflects freight and energy mix disadvantages, but gap with **Mattampally** is narrowing. * **Efficiency Gains Materializing:** New preheater driving **₹250/tonne cost reduction**, supporting margin improvement and parity with best-in-class plants. * **Inventory Optimization:** Reduced to one-quarter-ahead coverage, lowering exposure to input cost volatility. --- # 4. Manufacturing & Capacity ## A. Key Figures * **Plant Utilisation:** **57%** Mattampally · **82%** Gudipadu · **66%** Bayyavaram · **95%** Jeerabad · **40%** Jajpur · **39%** Dachepalli * **Electrical Consumption (up to clinker):** **51 units** Andhra · **52 units** Mattampally * **Thermal Energy Consumption:** **~720 Kcal/kg** Andhra · **725–730 Kcal/kg** Mattampally * **CapEx:** **₹291 Cr** FY2027 * **WHRS Savings (Gudipadu):** **₹100–125/tonne** net saving up to clinkerisation * **Grinding Mill Savings:** **₹150–200/tonne** (Jeerabad, from early FY27) · **₹25–50/tonne** (Andhra, from Aug 2026) ## B. Plant Utilisation * **Divergent Utilisation:** Significant variation across plants, with **Jeerabad at near-full capacity (95%)** and **Jajpur & Dachepalli underutilised (<40%)**, indicating lumpy demand absorption and ramp-up challenges. * **Efficiency Gains:** Electrical consumption at Andhra improved sharply post-commissioning, now matching or exceeding legacy units despite lack of WHRS. ## C. Capacity Additions * **Near-Term Expansion:** Dachepalli cement capacity addition expected by **August 2026**, supported by completed 6-stage preheater; Jeerabad set to grow 50% to **15 million tonnes** by early Q1 FY2027. * **CapEx Roadmap:** FY2027 CapEx set at ₹291 Cr, with major investments planned from **end-FY2028 to early FY2029** for long-term capacity uplift to **5 crore tonnes**. * **Competitive Lull:** No peer capacity additions expected in next six months; **Ramco’s Kolimigundla Line-2** to enter service before end of next fiscal. ## D. Energy Efficiency * **Technology-Driven Parity:** Andhra achieves best-in-class thermal efficiency despite no WHRS, outperforming Mattampally on specific consumption due to advanced preheater design. * **Renewables Gap:** Mattampally runs on **~90% green power**, while Andhra remains grid-dependent with only a **6 MW solar plant** online, highlighting sustainability divergence. * **Upcoming Leverage:** Gudipadu’s **35 MW WHRS** (FY2026 commissioning) and new grinding mills at Jeerabad and Andhra to deliver **material cost savings per tonne** as projects come online. --- # 5. Product & Geography Mix ## A. Key Figures * **Product Mix:** **55% OPC**, **45% blended cement** ## B. Cement Product Mix * **OPC-Dominant Portfolio:** Product mix skewed toward OPC due to regional market preferences, resulting in **higher relative production costs** versus blended cement peers. ## C. Sales by Region * **Concentrated Regional Exposure:** Nearly **56% of sales** derived from Telangana and Andhra Pradesh, indicating high dependence on South-Central India. * **Emerging Western & Eastern Demand:** Combined ~20% contribution from Maharashtra, Gujarat, Odisha, and Madhya Pradesh signals early traction in new corridors. --- # 6. Risks & Input Costs ## A. Key Figures * **Fuel Price Guidance:** **2%–3%** increase expected next year * **Coal Cess Benefit:** **₹50–₹55/tonne** quarterly, incremental value in **Q4**, full impact by year-end * Domestic Coal Price: Increased from ₹1.26 in Q2 to ₹1.72 in current quarter * Singareni Coal Cost: Landed as-fired cost at Mattampally is sub ₹1.20 ## B. Fuel Price Volatility * **Stable Near-Term Costs:** No expected increase in power and fuel costs for current FY despite pet coke volatility, due to strategic shift to domestic and imported coal. * **Cost Competitiveness:** Coal cess of ₹400/tonne has offset rising pet coke prices, making coal more economical despite flat coal pricing. * **Regional Mix Complexity:** Product mix and regional variations in raw material and coal costs limit cross-unit comparability. * **Current Pricing Reflects Real-Time Trends:** Q2 FY26 figures are not rebased; updated costs reflect actual as-fired fuel mix and current market conditions, not restatements. --- # 7. Guidance & Outlook ## A. Key Figures * **Vizag Land Net Proceeds:** **₹350 Cr** (after expenses and taxes) * **CapEx FY26:** **₹489 Cr** (₹303 Cr spent in 9 months, ₹186 Cr in Q4) * Debt-Equity Target: ~0.5x within 18–24 months post-debt repayment ## B. FY 2026 Targets * **Conservative Guidance:** Maintains prior outlook despite **stronger-than-expected demand**, signaling disciplined forecasting. * **Asset Monetization:** Full Vizag land sale expected within 18 months, with proceeds received in **5–6 tranches** due to local market constraints. * **Cost Convergence:** Andhra-Mattampally cost gap to narrow gradually, though **energy sourcing differences** will sustain a structural divergence. * **Capital Discipline:** No major CapEx beyond FY26; maintenance spend to wind down by end of next fiscal, enabling deleveraging. ## C. FY 2027 Projections * **Volume Visibility:** FY27 target of 7 million tonnes reaffirmed, underpinning confidence in demand durability. * **Andhra Cement Path to Profitability:** Near breakeven achieved; expected to turn profitable this quarter if current **pricing momentum holds**.