India: Birla Corporation reports higher cement sales in Q1FY’27; weak prices, rising fuel costs impact margins

• Total cement sales volume rises 5% y-o-y, trade sales increase 11% y-o-y
• Intense competition in central India keeps cement prices under pressure

Birla Corporation reported higher cement sales and revenue in Q1FY’27, supported by strong demand from the trade segment, higher premium cement sales, and high capacity utilisation. Cement sales volume increased 5% y-o-y to 5.05 mnt, while revenue from operations rose 7% to INR 2,669 crore.

However, higher fuel costs and weak cement prices, especially in central India, weighed on earnings during the quarter.

Demand improves, but cement prices remain under pressure
India’s cement demand improved from the second half of May, supported by higher government spending on infrastructure projects and continued construction activity. The delayed monsoon also helped extend construction work across several regions during the quarter.

Despite better demand, cement prices remained under pressure. Price hikes announced during April and May were rolled back in June due to intense competition among manufacturers. The company expects demand to remain moderate until the monsoon ends, with construction activity likely to improve from September.

Cement sales supported by higher trade, premium products
The company delivered steady operational performance during Q1FY’27. Cement sales volume increased 5% y-o-y to 5.05 mnt from 4.79 mnt, while capacity utilisation remained high at 98%.

Revenue from operations increased 7% y-o-y to INR 2,669 crore, supported by higher dispatches across Maharashtra, Uttar Pradesh, Bihar, and Rajasthan.

Birla Corporation continued to improve its sales mix through premium and blended cement products.

• Premium products accounted for 62% of total cement sales, compared with 59% in Q1FY’26.
• Trade sales increased 11% y-o-y, with the trade channel contributing 82% of total dispatches, up from 78% a year earlier.
• Blended cement accounted for 88% of total cement sales.

Sales of the company’s flagship premium brand, Perfect Plus, recorded 24% y-o-y growth during the quarter.

Its subsidiary, Reliance Cement Company Private Limited (RCCPL), also reported healthy volume growth. Cement sales from the Kundanganj and Mukutban plants increased 26% and 12%, respectively.

Weak trade prices limit earnings growth
Although cement demand improved, the company did not benefit fully from the price recovery seen in some markets.

The company highlighted that its business continues to be largely focused on the trade market and blended cement. During the quarter, prices improved mainly in the non-trade and Ordinary Portland Cement (OPC) segments, while trade cement prices remained largely unchanged. As a result, overall cement realisations remained lower than expected.

The company also highlighted that central India continued to witness intense competition, keeping cement prices under pressure. Since a significant share of the company’s sales comes from this region, weaker prices had a larger impact on its earnings than on companies with greater exposure to northern and eastern India.

The company will continue to focus on trade and blended cement while exploring other measures to improve profitability.

Higher fuel costs affect margins
Higher input costs remained the biggest challenge during Q1FY’27. Cement realisation increased 2% y-o-y to INR 4,947/t. However, earnings before interest, taxes, depreciation and amortisation (EBITDA) declined 4% y-o-y to INR 365 crore. EBITDA per tonne fell 6% y-o-y to INR 675/t from INR 715/t.

Power and fuel costs increased 5% y-o-y, mainly due to higher imported pet coke prices, increased diesel costs, and higher limestone mining expenses.

Packaging costs also increased during the quarter, while temporary logistics disruptions in Maharashtra affected dispatches from the Mukutban plant.

The company expects production costs to increase by another INR 70-80/t during Q2FY’27 because of higher imported fuel and diesel prices.

Expansion, renewable energy remain key priorities
Birla Corporation continued to invest in capacity expansion and renewable energy projects during the quarter.

Project updates

• Kundanganj grinding unit is expected to contribute fully to FY’27 cement sales.
• Installed cement capacity remains on track to increase to 27.6 mnt/year by FY’29.
• FY27 capital expenditure (Capex) guidance has been maintained at INR 900 crore.
• Capex during Q1FY’27 stood at around INR 120 crore.

The company also continued to increase the use of clean energy.

• Green power share increased to 33% from 31% at the end of FY’26.
• A 5 MW solar power plant was commissioned at the Mukutban plant.
• Waste Heat Recovery System (WHRS) capacity currently stands at 43-44 MW and is expected to increase to around 50 MW.
• The planned Maihar expansion will add another 17-18 MW of WHRS capacity.

Outlook
The company expects cement demand to improve after the monsoon season, supported by infrastructure spending and construction activity. However, weak prices in central India and higher fuel costs may continue to pressure margins in the coming quarter, while ongoing expansion projects and higher renewable energy use are expected to support long-term operational performance.