Sagar Cements Navigates Monsoon Season with Strategic Growth and Efficiency Gains in Q2 FY26

Sagar Cements Limited has demonstrated a resilient performance in the second quarter and first half of fiscal year 2026, navigating the typical seasonal slowdown caused by the monsoon. Despite a softer pricing environment, the company reported significant year-on-year growth in both revenue and sales volume, underpinned by a strong focus on operational efficiency and strategic capacity expansions. This period saw the company lay crucial groundwork for future growth, with key projects advancing and a positive outlook for demand momentum in the coming quarters.

For Q2 FY26, Sagar Cements recorded a total revenue from operations of ₹602 crore, marking a substantial 27% increase compared to ₹475 crore in Q2 FY25. Sales volume also saw a healthy uptick, growing by 17% year-on-year to 1.36 MnT. This growth was achieved despite a marginal softening in realisations, which the management attributed to seasonal trends. The company's EBITDA for the quarter stood at ₹51 crore, a significant improvement from ₹20 crore in the prior year period, with margins expanding to 9% from 4%. EBITDA per tonne was reported at ₹377. For the first half of FY26, total revenue reached ₹1,273 crore, a 23% increase from H1 FY25, with sales volume growing by 14% to 2.79 MnT.

Operational Resilience and Strategic Investments

The company's operational performance during Q2 FY26 was marked by a dual focus on efficiency and strategic asset development. While the Mattampally plant operated at 48% utilisation, other units like Gudipadu, Bayyavaram, Jeerabad, Jajpur, and Dachepalli operated at higher levels, ranging from 32% to 94%. The management highlighted that cost optimisation initiatives, including freight efficiency through shorter lead distances, lowering the clinker factor, and increasing the share of renewable energy, were instrumental in sustaining healthy margins.

Key capacity expansion projects are progressing as planned. The construction of a 6-stage preheater at the Dachepalli Plant of Andhra Cements was successfully completed and commissioned on October 23, 2025. This upgrade is expected to significantly improve energy efficiency, allowing the plant to break even at 50% capacity utilisation. The company anticipates commissioning the full cement capacity at Dachepalli by Q1 FY27, increasing it from 2.25 MnT to 3.00 MnT. Additionally, the Jeerabad capacity expansion from 1 MTPA to 1.5 MTPA and a 4.35 MW Waste Heat Recovery (WHR) project at the Gudipadu unit are both expected to be commissioned by the end of FY26.

Sagar Cements is also aggressively expanding its green power footprint. Recent installations include a 6 MW solar power plant at Dachepalli (commissioned September 2025) and a 6 MW solar plant at Gudipadu in FY24. Further investments in WHR and solar projects are planned across Mattampally, Jeerabad, and Dachepalli units through FY29, aiming to enhance energy independence and reduce operational costs. These initiatives align with the company's commitment to sustainable and profitable growth.

Market Outlook and Financial Position

Looking ahead, Sagar Cements anticipates a strengthening demand momentum in the second half of FY26, driven by continued government push in infrastructure, housing, and construction activities. The management expects overall sales volumes for FY26 to be around 6 million tonnes and projects an EBITDA per tonne of ₹600 for the current year. For FY27, the company is considering an upward revision of its sales volume guidance, currently around 7 million tonnes, and expects capital expenditure to be between ₹250 crore to ₹275 crore, including maintenance.

On the financial front, the company's consolidated net worth as of September 30, 2025, stood at ₹1,758 crore. Gross debt was ₹1,610 crore, with long-term debt accounting for ₹1,216 crore, resulting in a healthy debt-equity ratio of 0.69:1. Cash and bank balances were ₹175 crore. The company's focus on disciplined cost management and strategic expansions is expected to further strengthen its financial position and support future growth.

Concluding Thoughts: Strategic Clarity for Future Growth

Sagar Cements' Q2 FY26 performance reflects a clear strategic direction: leveraging operational efficiencies, investing in sustainable capacity expansion, and embracing green energy. Despite temporary setbacks from plant shutdowns and seasonal pricing, the company's proactive measures position it well to capitalise on the anticipated demand surge in the Indian cement market. The ongoing projects, coupled with a robust balance sheet and a focus on cost optimisation, underscore Sagar Cements' commitment to sustained, profitable growth and enhanced shareholder value in the long term.