Nuvoco Vistas Corporation Ltd Q2 FY2026 Concall Summary

Key Takeaways

• Resilient quarter despite triple headwinds: EBITDA rose 62% YoY to ₹371 crores even as an extended monsoon, GST transition disruption and a concentrated festive season compressed volumes.
• The GST pass-through was a deliberate margin sacrifice: Management passed the full 10-percentage-point rate cut to customers as a governance principle, compressing near-term realizations but protecting channel trust.
• Vadraj acquisition is now in execution, not planning: Equipment orders are placed, site work is underway, and trial runs are targeted for H1 FY27 with full commissioning by Q3 FY27.
• Premiumization is the quiet margin lever: Concreto and Duraguard are gaining brand momentum; management targets a 25% sequential jump in premium volumes in Q3, then another 10% in Q4.
• What to watch next quarter: Whether the promised 7%-8% H2 demand materializes, the pace of the ₹50/ton cost savings program, and closure of the CCD refinancing deal that will shift ₹1,200 crores from debt to an equity-like instrument.

Demand & Volume

• Monsoon was the primary drag: An unusually intense and prolonged monsoon across key markets arrived earlier than usual and extended well into the latter part of the quarter, slowing construction activity.
• GST transition froze the channel: Dealers stopped buying roughly 15 days before the GST rate change announcement; demand picked up after September 22 but management suspects that was partly pent-up demand rather than a clean recovery signal.
• Festive season compressed the quarter: Unlike last year when festivals were spread across Q2 and Q3, this year all sacred periods and festivals concentrated within the quarter itself, further squeezing working days.
• Volume growth was modest: Company volumes grew around 2%, with the East subdued at 2%-4% while the North delivered handsome growth.
• H2 bet rests on housing and infra execution: Management expects cement demand to pick up in the second half, supported by increased execution in housing and infrastructure projects, the positive impact of the GST rate reduction, and lower interest rates.
• Industry growth estimate was declined: When asked for industry demand growth for the quarter and in the company's key markets, management said it would be very difficult to estimate and declined to put a number on it.

Jayakumar Krishnaswamy: "I am looking at not leaving any product on the table if the market goes at 7% to 8%."

Pricing, Realization & GST

• Prices were flat before the GST cut: Between Q1 and Q2, prices were more or less flattish; since the GST announcement, there has been no price drop other than the GST pass-on itself.
• The GST benefit was passed through in full: Management passed on the entire benefit of the rate reduction from 28% to 18% to customers, framing it as part of the company's corporate governance philosophy and commitment to nation-building.
• Near-term price increases are off the table: Management stated it is morally obligated not to tinker with prices in the short term unless a big event or raw material price spike forces the issue.
• Realization improvement will come from mix, not absolute price: The company plans to lift net-of-discounted-tax realization by ₹25 to ₹50 per ton through geo-mix optimization (selling more in higher-realization markets like Rajasthan, Chhattisgarh and Haryana) and premiumization.
• Dealer discounts are sacrosanct: Management made an explicit commitment never to reduce discounts to dealers, calling them an important part of the company's growth and rejecting short-term gains at their expense.

Jayakumar Krishnaswamy: "As our commitment to nation building and as per the expectations of the union government for the basic decision to reduce GST, we passed on the entire benefits to the customers as a part of our corporate governance philosophy."

Costs & Margins

• Fuel costs inched up: Blended fuel cost rose QoQ to ₹1.46 per Mcal, driven partly by a recent uptick in petcoke prices and partly by a couple of kiln shutdowns during the quarter.
• Other expenditure spiked on shutdown phasing: Other expenditure rose 12% YoY, purely because shutdown costs hit ₹33 crores this year versus ₹14 crores last year; one more shutdown remains, with all shutdowns to be completed by November 15.
• ₹50/ton cost savings program is on track: The target for FY26 over FY25 will reflect in H2, driven by alternate raw materials, waste-heat-recovery and captive-power-plant efficiency, lead distance reduction, and the newly commissioned Odisha siding.
• Fuel cost target for Q3: Management is targeting ₹1.43 per Mcal, give or take 0.1, and does not see a big reduction happening in the near future.
• AFR consumption rising: Alternative fuel and raw material consumption will move from 10% to a target of 12% in Q3 and Q4.
• CCD refinancing will deliver a P&L tailwind: The ₹1,200 crore CCD deal is about to close very soon; the instruments will move from debt to an equity-like instrument, producing a positive P&L impact in Q3.

Premiumization

• The strategy is a deliberate shift from the value play: In Q3 last year, when industry prices were at a 10-year low, Nuvoco adopted a value strategy; since then it has delivered four quarters of single-digit growth and one quarter of 16% growth, and management insists it will not leave volume growth behind while pursuing value growth: both run concurrently.
• Concreto and Duraguard are gaining brand momentum: Strong offtake reflects strengthening recognition for high-quality construction applications.
• North is the premiumization laboratory: The company is capacity-constrained in the North after next year, so it is shifting focus to premium products; microfiber commands roughly ₹20 per bag more than base product, and premium sale in the North has doubled from 7%-8% to 16%-18%.
• Sequential targets are specific: Management aims to increase Concreto Uno and Duraguard microfiber volumes by at least 25% in Q3 versus Q2, and then another 10% in Q4 versus Q3, targeting a 150-to-200-basis-point increase in premium product share over the coming quarters.
• Premium percentage will hold: Management does not expect the premium share to drop from the current 44%, though it could be give or take a percent; H2 volumes will be much higher so the absolute number rises even if the percentage is stable.
• GST-driven uptrading is too early to call: When asked whether the GST cut is driving customers to upgrade in October, management said it is too early to comment and would not put all eggs in one basket assuming it will happen overnight.

Capacity Expansion & Vadraj Acquisition

Vadraj (Kutch & Surat)

• Execution has moved from planning to site work: Inspection of all major equipment at Kutch and Surat is complete; critical goods and service orders for the Kutch clinker unit, Kutch grinding unit and Surat grinding unit have been released; site execution and overhauling activities are underway.
• Railway siding clearance received: Initial project clearance for the railway siding at Kutch has been obtained from Indian Railways.
• Timeline: Plants at Kutch and Surat, along with associated equipment including the jetty, are on track for trial runs by H1 FY27 with full commissioning targeted by Q3 FY27. The Surat grinding unit and clinker unit come on in H2 FY27; the Kutch grinding unit around April (Q4 FY27).
• Capacity ramp target: Management has a simple 2-3-4-5 framework: 0.2 crore tons in FY27, 0.3 crore tons in FY28, 0.4 crore tons in FY29, 0.5 crore tons in FY30.
• Surat mill phases: Phase-1 is 0.02 crore tons; within a year or so it will be taken to 0.03 crore tons.
• Captive power: Discussions with JSW are in the last stages and should be concluded in the next few weeks.

East brownfield

• Internal projects completed: Railway sidings, wagon tipplers and cement loading systems at the Odisha Cement Plant, and clinker wagon loading and coal loading systems at the Sonadih Cement Plant are now complete.
• New expansion announced: The company is adding 0.4 crore tons per annum through one cement mill at Arasmeta plus equipment upgrades and internal debottlenecking across three plants.
• Phasing: 0.1 crore tons each targeted in December 2025, March 2026, June 2026 and FY27. Jojobera expands from ~6.3 to ~7.3 mtpa by end of December; Panagarh adds 0.1 mtpa by end of March; Jajpur comes in June next year; Arasmeta targets Q4 FY27.
• Incremental sales in FY27: 1.75 to 0.2 crore tons versus this year.

Medium-term optionality

• Chittor brownfield takes priority over Gulbarga greenfield: Once Vadraj operations commence in FY27, the company has the option to expand in the North through a brownfield project at Chittor (lower cost) or pursue greenfield development in the Gulbarga region; the North expansion is expected to take precedence.
• Decision timeline: The Chittor versus Gulbarga evaluation will crystallize around Q4 FY27, roughly 24 months from now. Gulbarga becomes a focus area only if market conditions in North Karnataka and Maharashtra change dramatically.
• Surat old mill relocation: At some stage, the old Surat mill will be relocated to Chittor (as a grinding unit) or Gulbarga (as a split grinding unit) at much lower cost.
• Kiln debottlenecking optionality: The kiln can be expanded from 10,000 to 12,000 TPD in 6-8 months; management will do it when needed.

Jayakumar Krishnaswamy: "I have a simple number 2-3-4-5, 0.2 crore in '27, 0.3 crore in '28, 0.4 crore in '29 and 0.5 crore in '30."

Balance Sheet & Capital Allocation

• Deleveraging is a big agenda going forward: Management is comfortable with debt in the range of ₹3,500 to 4,000 crores.
• CCD refinancing is imminent: The ₹1,200 crore CCD deal is about to end very soon; the instruments will move from debt to an equity-like instrument, with a positive P&L impact in Q3.
• FY26 capex cash outflow: Approximately ₹550 crores total, comprising routine capex of ₹100-150 crores, Vadraj rebuild of roughly ₹300 crores in H2, and East expansion of roughly ₹50 crores.
• FY27 capex: Approximately ₹750 crores (₹150 crores routine plus ₹600 crores Vadraj) plus the East expansion component.
• Vadraj rebuild capex phasing: ₹600 crores each in FY26, FY27 and FY28.
• East expansion total capex: Under ₹200 crores, split roughly ₹50-80 crores in FY26 and ₹120-150 crores in FY27.

Guidance & Commitments

Key Metrics