# 1. Financial Performance ## A. Key Figures * **Realization per Ton:** **₹4,840** (Q2 FY, ex-other income) (+9% YoY) · **₹4,451** (Q2 prior) * **Volume Growth:** **6.8%** YoY * **EBITDA per Ton:** **₹1,105** stand-alone (-20% YoY) · **₹914** consolidated * **Depreciation (FY Guidance):** **₹2,450 Cr** (revised down from ₹2,800 Cr) ## B. Revenue & Realization * **Value-Over-Volume Execution:** Realization growth of **9% YoY** achieved despite full pass-through of GST benefit, driven by **premium product mix rising to 21%**. * **Pricing Resilience:** Prices flat QoQ with **no sequential erosion**, outperforming market trends amid post-GST correction and festival-related softness. * **Demand Headwinds:** Net realization dipped slightly in October due to **pan-India price slippage** from weak festive demand, though H1 base remains strong. ## C. EBITDA & Margins * **Margin Pressure with One-Time Impact:** EBITDA per ton decline reflects cost inflation and a **one-off write-off at Guntur unit**, partially distorting YoY comparisons. * **Margin Convergence:** UAE operations now aligned with domestic margins at **over 20%**, supporting consolidated margin stability and integration success. * **Performance Trend Improving:** Standalone-consolidated EBITDA per ton gap narrowed QoQ, indicating **operational improvement in international business**. ## D. Balance Sheet & Dividend * **Self-Funded Capex:** UAE expansion fully financed via local cash; **no external debt** deployed. * **Capital Allocation Scrutiny:** Despite high cash reserves and **low 4% dividend yield**, management signals gradual return enhancement, emphasizing **cash EPS as key forward metric**. --- # 2. Volume & Demand Trends ## A. Key Figures * Cement Sales Volume: 7.9 Mn tons (Sep '25 quarter) (+8%) vs. 7.6 Mn tons (Sep '24) * UAE Sales Volume: **13.19 Lakh tons** (Q2 FY26) vs. 9.87 Lakh tons (Q2 FY25) (+34%) * UAE Revenue Growth: +50% YoY · EBITDA: AED52.53 Mn (+158%) * **Sequential Volume Trend:** **~12% decline** (QoQ) due to monsoon impact ## B. Domestic Volume Growth * **Market Outperformance:** Cement sales growth significantly exceeded industry average in both Q1 and Q2, reflecting strong execution and demand capture. * **Broad-Based Demand:** National demand growth remains balanced across regions, with **north and west India** expected to lead near-term performance. * **Policy Tailwinds:** GST reduction on affordable housing to boost sales momentum in **Tier 1 and Tier 2 cities**, particularly in low- and mid-income segments. * **Full-Year Volume Outlook:** Management maintains guidance for **7–8 million tons** of total cement and clinker volume for FY26. ## C. UAE Sales Surge * **Record Performance:** UAE operations delivered best-ever quarterly results, driven by **sharp volume gains, higher realizations, and operational efficiency**. * **Strategic Asset Value:** UAE assets are well-positioned to serve national demand, with **capacity expansion underway** amid robust market conditions. * **Earnings Contribution:** Standalone vs. consolidated EPS gap widened to **INR33**, underscoring UAE’s growing earnings contribution. ## D. Seasonal Impact * **Monsoon Drag:** Seasonal QoQ volume decline of ~12% attributed to heavy rainfall, consistent with historical patterns. * **H2 Recovery Signal:** Resilient macro backdrop—supported by strong consumption, investment, favorable monsoons, and policy reforms—points to **rebounding cement demand in H2**. --- # 3. Product & Mix Shift ## A. Key Figures * **Premium Sales Mix:** **21%** of total sales (+600 bps YoY) · up from **15%** * **RMC Plants:** **24 operational plants** one year post-launch * **Trade Sales Mix:** **71%** in June · **70%** in September ## B. Premium Sales Rise * **Sustained Premiumization:** Strategic shift toward value over volume continues, with premium sales mix reaching 21% and set to remain elevated, enhancing brand equity and competitive positioning. * **Pricing Power Intact:** Ongoing **incremental price increases** across both premium and general categories support price buoyancy and value realization. * **Capacity Alignment:** New capacity rollouts, particularly in the North, will maintain focus on premiumization, reinforcing the company’s value-led growth strategy. ## C. RMC Expansion * **Rapid Market Penetration:** Industry-fast ramp-up with **24 operational RMC plants** in just one year, including entry into East India via Raipur, Chhattisgarh. * **Sustainability Innovation:** Launched **India’s first RMC solar plant in Jaipur**, running primarily on solar energy, marking a strategic step in carbon footprint reduction. ## D. Blended Cement Share * **Stable Blended Mix:** Blended cement maintained a **~69% average share** of sales in recent months, reflecting consistent product strategy amid shifting demand dynamics. * **Clinker Monetization:** Surplus clinker will now be converted into cement for domestic sale, optimizing asset utilization amid strong market demand. --- # 4. Capacity & Expansion ## A. Key Figures * **Current Capacity:** **62.8 MnT** (as of now) · **68.8 MnT** post-Jaitaran & Kodla commissioning (this quarter) * **Green Power Capacity:** **612 MW** (after Chitrakoot solar plant) * UAE Cement Mill Capacity: 3 MnT (new build) · Capex: AED 110 million (consolidated) * **RMC Plant Target:** **40 plants** by FY26 * Long-term Capacity Outlook: Up to 80 MnT by FY28–FY29 (demand-dependent) ## B. Domestic Commissioning * **Major Domestic Ramp-up:** Commissioning of a **36 MnT clinkerisation unit in Jaitaran** and final-stage completion of the **3 MnT Kodla integrated project**, both set to come online this quarter, significantly boosting operational scale. * **Regional Capacity Focus:** North region remains core with **50% of total capacity**, reinforced by a newly commissioned kiln and upcoming cement mill expansion; parallel growth underway in East and South. * **Sustainability Integration:** Commissioning of a **20 MW solar plant in Chitrakoot** underscores continued investment in green energy, expanding group renewable capacity. ## C. UAE Capacity Build * **Strategic International Expansion:** New **3 MnT cement mill in UAE** targets high-demand hubs (Dubai, Ras Al Khaimah), leveraging existing clinker surplus and strengthening regional footprint. * **Capital Allocation Discipline:** UAE capex fully embedded in consolidated budget with no impact on standalone spending, reflecting centralized investment planning. ## D. Future Ramp-up Plan * **Phased Long-Term Scaling:** Capacity path set to reach **200–500 MnT by March 2027**, with potential to scale further to **800 MnT by FY28–FY29**, contingent on **demand recovery and utilization trends**. --- # 5. Cost & Efficiency ## A. Key Figures * **Green Electricity Share:** **63%** of total consumption H1 FY'26 * AFR Rate: 2.3% in recent quarter (↑ from 1.5% same quarter last year) * Kcal/kg Cement: 1.59 in Q1 · 1.66 in Q2 (expected stable or lower) * **Fuel Mix:** **66% petcoke**, remainder coal and alternate materials * Rail Share: 11% current · 20% target (rail PTPK ₹1.8–1.9 vs. road ₹2.3–2.5) * **Average Lead Distance:** **451 km** Q1 · **441 km** Q2 ## B. Fuel Mix & Kcal * **Industry-Leading Green Power Usage:** Green electricity at 63% represents the highest penetration in the Indian cement sector and believed to be a global benchmark, supported by solar and impacted seasonally by monsoon. * **AFR Progress Amid Near-Term Decline:** Despite lower alternative fuel rate versus prior year, ongoing project rollouts signal potential for future AFR expansion. * **Fuel Mix Diversification:** Actual petcoke usage significantly below market assumptions, indicating greater reliance on coal and alternate materials, enhancing supply resilience. * **Energy Intensity Trends:** Kcal per kg rose in Q2 but expected to stabilize or decline slightly, supported by inventory positioning and fuel cost dynamics. ## C. Rail Logistics Push * **Strategic Rail Expansion for Cost Advantage:** Aggressive push to increase rail share from 11% to 20%, targeting **savings of at least ₹100 per ton** due to lower PTPK costs despite higher absolute rail rates. * **Logistics Efficiency:** Slight reduction in average lead distance QoQ reflects improved routing or demand localization. ## D. Maintenance Costs * **Rising Maintenance Spend:** Higher repair, maintenance, and spares costs are the primary driver of YoY growth in other operating expenses, with no one-off items reported. * **RMC Business Optimization:** Management is developing a standardized performance playbook to unlock profit and revenue potential across ready-mix concrete operations. --- # 6. Risks & Market Factors ## A. Key Figures * **GST Rate:** **18%** (reduced from 28%) * **Water Positivity Index:** **>8x** (100% waste recycled under zero liquid discharge) ## B. Monsoon Disruptions * **Resilient Realizations:** Maintained stable realization levels despite operational challenges from heavy monsoon rains in North India. ## C. Price Competition * **Narrowing Price Gap:** Actively reducing a **INR15–20+ price ladder** versus competitors through targeted pricing and distribution strategies, reinforcing value-over-volume discipline. ## D. Demand Uncertainty * **Cautious Demand View:** Management sees GST cut as transformational for long-term demand but stresses **short-term uncertainty** in conversion to actual sales; Chhath-related labor shortages further cloud near-term visibility. * **Market Share Discipline:** No meaningful loss of market share; outlook remains **in line or better than industry** due to fiscal tailwinds and geographic reach, despite prioritizing value over volume. --- # 7. Guidance & Outlook ## A. Key Figures * **Capex Guidance:** **₹3,000 Cr** for FY26–27 · **~₹3,000 Cr** expected for FY27–28 (spill into FY28–29 possible) ## B. Volume Projections * **Industry-Linked Growth Outlook:** Company expects to grow **in line with or marginally above industry** levels, though no definitive demand forecast is provided. * **Value-Driven Dispatch Discipline:** Growth strategy prioritizes **value over volume**, with dispatch decisions aligned to margin preservation. ## C. Strategic Focus * **Long-Term Margin Ambition:** Aims for **better-than-industry EBITDA performance** over time, though **₹1,300–1,400/ton EBITDA** target remains subject to market dynamics. * **Realization Strength:** **9% YoY realization growth** underscores pricing power and favorable product mix versus peers. * **RMC Scaling Objective:** Focus on scaling ready-mix concrete business with **improved operational efficiency and consistent new plant performance**.