NCL Industries operating profit drops 41% despite sales rise

NCL Industries Limited reported total profit before interest and tax of Rs 27.09 crore for the quarter ended 30 September 2026, down 41% year on year despite a 12% increase in net sales to Rs 385.92 crore. The cement division’s profit before interest and tax fell 50% to Rs 19.45 crore, while Rs 4.86 crore of exceptional income lifted reported profit before tax.

Why did NCL Industries' operating profit fall in September 2026?

NCL Industries’ total segment profit before interest and tax, or PBIT, fell to Rs 27.09 crore in the quarter ended 30 September 2026 from Rs 45.50 crore a year earlier. Net sales from continuing operations rose to Rs 385.92 crore from Rs 344.53 crore, but the higher sales did not translate into higher segment profit.

The main driver was the cement division, where PBIT declined by Rs 19.66 crore year on year to Rs 19.45 crore. That reduction was larger than the total group PBIT decline of Rs 18.40 crore because the Boards and Ready Mix Concrete divisions recorded higher PBIT during the quarter.

Interest expense increased to Rs 5.44 crore from Rs 4.43 crore in the corresponding quarter of 2025. Before exceptional items, profit before tax from continuing operations declined to Rs 21.65 crore from Rs 41.07 crore, a 47% reduction that was steeper than the 15% fall in reported profit before tax.

How did NCL Industries' sales change across business divisions?

NCL Industries’ net sales from continuing operations rose by Rs 41.39 crore to Rs 385.92 crore in the September 2026 quarter. Total segment revenue before inter-segment eliminations and taxes and duties was Rs 470.55 crore, compared with Rs 474.18 crore a year earlier, meaning the reported net-sales increase reflected changes in deductions as well as segment revenue.

Taxes and duties declined to Rs 74.06 crore from Rs 91.30 crore, while inter-segment revenue fell to Rs 10.57 crore from Rs 38.35 crore. These lower deductions more than offset the Rs 3.63 crore decline in total segment revenue before those deductions.

Cement division revenue increased to Rs 400.98 crore from Rs 397.12 crore. In contrast, Boards division revenue fell to Rs 37.86 crore from Rs 42.38 crore, Ready Mix Concrete division revenue declined to Rs 29.96 crore from Rs 31.41 crore, and Energy division revenue decreased to Rs 1.76 crore from Rs 3.27 crore.

The sequential revenue comparison was positive. Net sales increased from Rs 343.62 crore in the quarter ended 30 June 2026 to Rs 385.92 crore in the September quarter, while cement revenue rose from Rs 357.17 crore to Rs 400.98 crore. Total PBIT, however, declined from Rs 29.13 crore to Rs 27.09 crore over the same two quarters.

Which businesses offset part of NCL Industries' cement profit decline?

NCL Industries’ Boards and Ready Mix Concrete businesses partly offset the cement division decline, but their contributions were smaller in absolute terms. Boards division PBIT rose to Rs 4.22 crore in the September 2026 quarter from Rs 1.90 crore a year earlier, an increase of Rs 2.32 crore despite a Rs 4.52 crore decline in Boards revenue.

Ready Mix Concrete PBIT rose to Rs 0.79 crore from Rs 0.16 crore, an improvement of Rs 0.63 crore, even as revenue fell by Rs 1.45 crore. Energy division PBIT declined to Rs 0.75 crore from Rs 2.24 crore, while unallocated PBIT decreased to Rs 1.88 crore from Rs 2.08 crore.

The cement operation remained the largest contributor to both revenue and operating profit. Its Rs 19.45 crore PBIT represented about 72% of the Rs 27.09 crore total PBIT in the September 2026 quarter, compared with Rs 39.11 crore of the Rs 45.50 crore total in the prior-year period.

For the half year ended 30 September 2026, cement PBIT was Rs 43.06 crore, down from Rs 81.26 crore in the corresponding prior-year half. Total PBIT for the six-month period declined to Rs 56.23 crore from Rs 88.97 crore, while Boards PBIT rose to Rs 8.14 crore from Rs 1.27 crore.

What did the MBL cess reversal contribute to NCL Industries' result?

NCL Industries recorded exceptional income of Rs 4.86 crore in the September 2026 quarter from reversing a provision for Mineral Bearing Lands, or MBL, cess. The provision related to the Mattapally, Gundlapally and Sulthanpur limestone mines, according to the company’s results note dated 12 November 2026.

The company said the Mines and Minerals (Development and Regulation) Amendment Act, 2026 became effective on 22 August 2026. Under Section 9D(2) of the amended Act, NCL Industries said the outstanding cess was no longer payable because it had not been deposited with or recovered by the state government before the law took effect.

The reversal increased reported profit before tax from Rs 21.65 crore before exceptional items to Rs 26.51 crore. Current tax was Rs 14.88 crore and deferred tax was Rs 0.44 crore, resulting in net profit from continuing operations of Rs 19.93 crore, compared with Rs 21.43 crore in the September 2025 quarter.

The prior-year quarter included Rs 9.77 crore of exceptional items that reduced profit before tax from Rs 41.07 crore before exceptional items to Rs 31.30 crore. The contrasting exceptional-item treatment means the pre-exceptional profit comparison shows a larger decline than the reported profit-before-tax comparison.

What do NCL Industries' balance sheet and cash flows show?

NCL Industries reported standalone total assets of Rs 1,634.52 crore at 30 September 2026, compared with Rs 1,588.32 crore at 31 March 2026. Cement division assets increased to Rs 1,208.41 crore from Rs 1,154.31 crore, while Boards division assets declined to Rs 97.26 crore from Rs 111.34 crore.

Standalone other equity increased to Rs 929.14 crore at 30 September 2026 from Rs 901.01 crore at the March 2026 year-end. Paid-up equity share capital was unchanged at Rs 45.23 crore, and total equity was Rs 974.37 crore compared with Rs 946.25 crore six months earlier.

Standalone net cash inflow from operating activities was Rs 38.61 crore for the half year ended 30 September 2026. An increase in trade receivables used Rs 33.85 crore of cash, while payments for property, plant and equipment were Rs 25.85 crore and net investing cash outflow was Rs 33.40 crore.

Cash and cash equivalents increased to Rs 5.69 crore at 30 September 2026 from Rs 3.16 crore at 31 March 2026. The Board approved the unaudited results on 12 November 2026, and the statutory auditors said their limited review had not identified a matter causing them to believe the standalone statement contained a material misstatement.

Conclusion

NCL Industries increased September-quarter net sales by Rs 41.39 crore, but operating earnings moved in the opposite direction as total PBIT fell by Rs 18.40 crore. The cement division accounted for a Rs 19.66 crore reduction in PBIT, while improved Boards and Ready Mix Concrete results only partly moderated the decline. The Rs 4.86 crore MBL cess reversal also narrowed the reported decline in profit before tax relative to the pre-exceptional result.

The next disclosed development to watch is NCL Industries’ 130 megawatt solar and wind project at Tuticorin, Tamil Nadu. The board has approved the full project, estimated to cost Rs 987.17 crore and financed through debt and internal accruals, with connectivity scheduled for February 2028; the company also said its proposed Odisha cement plant remains preliminary, with no land allotment or definitive agreement executed.