Sagar Cements Q1 FY27 Earnings Call — Analysis (NSE: SAGCEM)
Sagar Cements Q1FY27 volume up 13% but EBITDA/t slumps to ₹451; management guides FY27 EBITDA/t ₹500-550 and ₹150 Cr from Vizag land sale to reduce debt
The take
Q1FY27 Revenue ₹706 Cr ( +5% YoY ) . New guidance — FY27 fy27 cement sales volume 7 million tonnes . New story: Cost optimisation through WHR & green energy .
Results
Revenue ₹706 Cr (up 5% YoY) on 13% volume growth; EBITDA/t ₹451, net loss ₹28 Cr; gross debt ₹1,704 Cr (D/E 0.78), cash ₹105 Cr
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| Revenue | ₹706 Cr | +5% | yoy · Q1FY27 · YoY |
| EBITDA per tonne | ₹451 | none · Q1FY27 | |
| Net loss after tax | ₹28 Cr | none · Q1FY27 | |
| Gross debt | ₹1,704 Cr | point_in_time · point_in_time · 30-Jun-2026 | |
| Cash & bank | ₹105 Cr | point_in_time · point_in_time · 30-Jun-2026 | |
| Debt/Equity | 0.78 | point_in_time · point_in_time · 30-Jun-2026 | |
| Volume growth | ~13% | +13% | yoy · Q1FY27 · YoY |
| Power & fuel cost/t | ₹1,484 | +₹34 | yoy · Q1FY27 · vs ₹1,450 in Q1FY26 |
| Freight cost/t | ₹858 | -₹2 | yoy · Q1FY27 · vs ₹860 in Q1FY26 |
Guidance
FY27 cement volume ~7 mt (excl. clinker), EBITDA/t ₹500-550; Vizag land sale to fetch ₹150 Cr in FY27; no major capex until end-2028
What management committed to
- [Sagar Cements'] FY27 cement volume (excluding clinker sales) will be approximately 7 million tonnes — 7 million tonnes, FY27
- FY27 EBITDA per tonne will be in the range of ₹500 to ₹550 — ₹500–550, FY27
- Sale of [Vizag] land will generate ₹150 Cr in FY27 — ₹150 Cr, FY27
- Remaining [Vizag] land sale will generate ₹200 Cr in FY28 — ₹200 Cr, FY28
- [Andhra Cements] 0.75 million tonne cement capacity expansion will be completed before the end of the current quarter (Q2FY27) — 0.75 million tonnes, Q2FY27
- Andhra Cements capacity utilisation will reach close to 60% by end of FY27 — close to 60%, FY27
- Waste heat recovery at Gudipadu will deliver ₹25 per ton savings on a consolidated volume basis — ₹25 per ton, FY27
- No major CapEx plans for [Sagar Cements] for the next couple of years up to end of 2028, except maintenance capex of ₹30-40 Cr per year — ₹30-40 Cr per annum maintenance, FY28
- [Sagar Cements’] net debt will decrease from ₹1,565 Cr to ₹1,159 Cr by end of FY27 — ₹1,159 Cr, FY27
- FY28 volume growth will be double-digit (similar percentage to FY27) — double-digit, FY28
Key themes
Cost optimisation and land monetisation to offset inflation
How the narrative shifted
- Cost optimisation through WHR & green energy: Management highlights commissioning of WHR at Gudipadu and Jeerabad expansion, expecting savings to fully offset ₹100/t cost inflation and improve EBITDA/t to ₹500-550.
- Vizag land monetisation & debt reduction: Sale of Vizag land hinges on a generic Government Order; ₹150 Cr pencilled in for FY27 and ₹200 Cr for FY28, expected to materially reduce net debt.
- Southern demand recovery driven by govt projects: South India demand accelerated by Amaravati capital, state housing schemes, and post-election catch-up; management expects full-year 8-10% growth.
- Capacity expansion fueling volume growth: Jeerabad 0.5mt and Andhra 0.75mt expansions to support 13-15% volume growth in FY27; Andhra utilisation to touch 60% by year end.
- Input cost inflation from geopolitical tensions: Elevated fuel & packaging costs due to West Asia conflict add ₹100/t for the full year, but internal efficiency gains likely to neutralise the impact.
Operational commentary
- Commissioned remaining 1.55 MW of waste heat recovery at Gudipadu (total 4.35 MW), expected to save ₹25/t on consolidated basis
- Completed 0.5 mt capacity expansion at Jeerabad unit; plant now at 96% utilisation
- Andhra Cements 0.75 mt grinding capacity expansion on track for completion by end of Q2FY27
- Vizag land sale awaiting generic government GO; confident of ₹150 Cr realisation in FY27
- Andhra Cements utilisation targeting 60% by end of FY27 (currently ~50%)
- No major capex planned for next two years beyond maintenance spend of ₹30-40 Cr/year
- South demand expected at 8-10% for FY27; AP+Telangana grew 11% in Q1, Karnataka flat, Tamil Nadu 4%, Kerala 12%
- Super fine building material project work started, operational plan to be shared by end of Q2
Analyst Q&A
Q. How much clinker sale volume are we looking at in Q2 and for the full year?
We would revert with exact volumes in due course of time.
Q. Any update on the super fine building material initiative?
We have started the work. We would revert with much more operational plan by end of Q2.
Q. Why is Andhra Cements' cost structure still above ₹5,000/t, and how will it evolve?
Variable cost is ₹100-125 higher than Mattampally because of lack of WHR and higher grid power; fixed cost burden from debt. Expect improvement as expansion and efficiency gains kick in.
Q. Does the net debt reduction projection factor in the Vizag land sale?
Yes, ₹150 crore is pencilled in for the current year.
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