India: Sagar Cements reports 13% y-o-y increase in cement sales in Q1FY’27

• Revenue increases 5% y-o-y, but EBITDA declines 40%
• Higher fuel prices to raise production costs by INR 100/t

Sagar Cements reported higher cement dispatches, improving capacity utilisation, and steady demand across its key markets in Q1FY’27. Cement sales volume increased 13% y-o-y to 1.61 million tonnes (mnt), while revenue rose 5% y-o-y to INR 706 crore. However, higher fuel, power, and packaging costs impacted profitability during the quarter.

The company remains focused on improving operational efficiency through capacity expansion, renewable energy, and cost optimisation initiatives to strengthen margins in the second half of FY’27.

Demand supported by strong infrastructure and housing activity 
Cement demand remained healthy during Q1FY’27, supported by government infrastructure spending, housing construction, and improving urban and rural activity. However, extreme heatwaves and election-related labour shortages in parts of south India temporarily affected construction activity during April and May.

The company estimated cement demand in South India grew around 6-6.5% during the quarter. Andhra Pradesh and Telangana recorded nearly 11% demand growth, while Tamil Nadu witnessed around 20% y-o-y growth in June after election-related disruptions eased. Karnataka remained largely stable.

Outside its core southern markets, demand also remained healthy in Maharashtra, Odisha, and Madhya Pradesh. The company expects cement demand in South India to grow 8-10% during FY’27, supported by infrastructure projects, housing schemes, and improving construction activity.

Cement sales rise, production improves
Sagar Cements delivered a strong operational performance during Q1FY27. Cement sales increased 13% y-o-y to 1.61 mnt, while production also rose 13% to 1.63 mnt. Overall capacity utilisation improved to 63%, reflecting better plant operations.

Revenue from operations increased 5% y-o-y to INR 706 crore, supported by higher dispatches, although cement prices remained largely stable during the quarter.

The company also reported improvements across key operating parameters.

• Trade sales accounted for 52% of total dispatches.
• Green power utilisation increased to 22%.
• Capacity utilisation remained high at Jeerabad (96%) and Gudipadu (79%), while utilisation at Bayyavaram, Mattampally, Jajpur and Dachepalli continued to improve.

Despite higher sales volumes, EBITDA declined 40% y-o-y to INR 72 crore due to rising input costs. EBITDA per tonne stood at INR 451/t, while the company reported a net loss of INR 28 crore during the quarter.

Cement prices remain largely stable
Cement prices remained broadly stable during Q1FY’27, with only marginal q-oq improvement in realisations.

The company indicated that pricing across South India remained disciplined despite competitive market conditions. Demand improved during June and remained largely stable in July, supported by delayed monsoon conditions in several markets and improved labour availability.

The company expects cement prices to remain broadly stable through FY’27, supported by healthy infrastructure spending and housing demand across its key markets.

Higher input costs weigh on margins
Higher fuel, energy, and packaging costs remained the biggest challenge during the quarter.

Geopolitical tensions in West Asia pushed up imported fuel prices, resulting in nearly INR 100/t of additional production costs during FY’27, including around INR 50/t related to fuel costs alone.

Despite these pressures, the company expects operational improvements to offset a significant portion of the cost increase.

The Gudipadu waste heat recovery (WHR) project alone is expected to generate savings of around INR 25/t. The company maintained its FY’27 EBITDA guidance of INR 500-550/t, supported by easing input costs, stable cement prices and improved operating efficiencies during the second half of the fiscal.

Expansion projects remain on track
Sagar Cements continued to strengthen its production footprint during the quarter through capacity additions and operational improvements.

Project updates

• Completed a 0.5 mnt/year capacity expansion at the Jeerabad plant.
• A 0.75 mnt/year capacity expansion at the Andhra plant is expected to be commissioned before the end of Q2FY’27.
• Commissioned the remaining 1.55 MW WHR unit at Gudipadu, increasing total installed WHR capacity to 4.35 MW.
• Andhra Cements’ capacity utilisation is expected to improve to around 60% by the end of FY’27.
• Plans to expand its Gudipadu plant by 0.25 mnt/year by FY’28 and increase the Dachepalli plant’s cement capacity from 2.25 to 3 mnt/year by September 2026.
• No major capacity expansion projects are planned over the next two years beyond those currently under execution.

Outlook
The company expects operational performance to improve during the second half of FY’27, supported by stronger cement demand across South India, stable cement prices and higher plant utilisation. Recently commissioned capacity expansions, greater use of renewable energy and ongoing cost optimisation initiatives are expected to improve margins, while higher utilisation of the Andhra Cements business should further support volume growth and operational efficiency.