Synopsis: A South India-focused cement maker posted a sharp jump in operating profit for the June quarter, helped by stronger dispatches and tighter control over raw material, power, and other costs, even as selling prices stayed largely unchanged.
A cement manufacturer with a strong base in South India has reported one of its better quarters in recent times, with earnings growing at a much faster pace than sales. The improvement came largely from higher volumes and leaner operations rather than price hikes, pointing to a business gradually getting its cost structure in order.
With a market capitalization of around ₹12,200 crore, shares of India Cements Limited were trading near ₹394, with a 52-week range of Rs. 485.80 to Rs. 329.75; the stock trades at a P/E of close to 90x.
Q1 Overview
On a consolidated basis, net sales for the quarter came in at ₹1,013 crore, roughly flat compared to ₹1,021 crore a year earlier. Total expenses fell to ₹864 crore from ₹942 crore, pushing operating EBITDA up sharply to ₹156 crore from ₹83 crore.
Profitability grew far quicker than the topline. EBITDA rose 72.8% YoY to ₹159 crore, while operating EBITDA per tonne improved by ₹221 YoY to ₹603 per tonne. Management attributed this to better operational efficiencies and operating leverage, suggesting the earnings jump came from tighter execution on the ground rather than any meaningful pricing support.
PAT before exceptional items came in at ₹52 crore, a clear turnaround from a ₹9 crore loss in the same quarter last year. Including exceptional items, reported PAT stood at ₹27 crore against a loss of ₹133 crore a year ago. Consolidated net debt rose to ₹1,540 crore as of June 2026 from ₹1,271 crore in March 2026, largely reflecting the ongoing capacity expansion and modernization spend.
Strong Volume Growth Supported Profitability
One of the biggest positives during the quarter was the sharp improvement in cement dispatches. Domestic cement volume rose 18.5% YoY to 2.58 million tonnes, allowing the company to benefit from operating leverage. Selling more cement meant fixed costs got spread across a larger base, and that alone did a lot of the heavy lifting for operating profitability, even though revenue growth was fairly muted.
Cost Optimisation Across Manufacturing Operations
Even with fuel costs running higher, the company managed to bring down its overall cost base. Power cost per tonne eased to ₹597 from ₹618, helped by power consumption dropping to 77.6 kWh per tonne from 85.36 kWh, a sign of improving plant efficiency. Raw material costs fell 11% sequentially, and other operating expenses declined 23% YoY, aided by operating leverage and savings tied to the company’s ongoing brand transition.
UltraTech-Led Modernisation Continues to Progress
Work continued on the company’s broader ₹2,000 crore investment program aimed at strengthening its long-term competitiveness. The plan includes expanding cement capacity by 2.8 MTPA, upgrading preheaters and coolers, optimizing manufacturing processes, adding 24 MW of waste heat recovery capacity, and building out 263 MW of renewable power. By June 2026, around ₹1,553 crore had already been committed, indicating the modernisation drive is well underway rather than still on paper.
Pricing Stayed Stable While Volumes Did the Heavy Lifting
Unlike quarters where earnings growth leans on price increases, this improvement came mostly from selling more cement and running operations better. Net domestic realisation inched up just 1.5% sequentially to ₹3,847 per tonne, which suggests the bulk of the profit jump had little to do with aggressive pricing action.
Green Energy Push Adds a Longer-Term Angle
Beyond the quarter’s numbers, the company kept building out its sustainability push, increasing the share of renewable energy and waste heat recovery in its power mix while improving clinker conversion efficiency. While these initiatives may not yield immediate results, they are expected to gradually reduce reliance on conventional power sources and grid tariffs, thereby potentially enhancing margins on a more sustainable basis.
Conclusion:
The June quarter shows significant improvement in the company’s performance, driven by strong volume growth and effective cost management, leading to a notable recovery in profitability despite stable cement prices.
Although increased net debt indicates ongoing capital expenditure, the company’s modernization efforts, renewable energy investments, and efficiency initiatives may enhance its cost competitiveness in the medium term. Future infrastructure demand, regional cement prices, and the success of expansion projects will be crucial in sustaining this earnings momentum.
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