Sagar Cements Limited reported a consolidated net loss of ₹7,305 lakh for the quarter ended March 31, 2025, reversing from a profit of ₹1,158 lakh in Q4 FY24. Despite a 5% year-on-year growth in sales volume to 1.69 million tonnes, the company’s revenue from operations declined by 7% to ₹658 crore in Q4 FY25. The mismatch between volume growth and revenue decline was driven primarily by weaker cement realisations, subdued pricing, and ongoing margin compression across regions.
Operating EBITDA for the quarter nearly halved to ₹3,682 lakh from ₹6,813 lakh a year earlier, translating into a margin contraction of 400 basis points to 6%. The EBITDA per tonne fell sharply by 48% to ₹218 from ₹422, driven by lower price realisations and marginally higher fixed costs, despite moderation in freight and fuel expenses.
From a quarterly perspective, Q4 volumes increased 23% sequentially compared to Q3 FY25, indicating an improving demand environment. This rebound was linked to a pickup in infrastructure activity, real estate construction, and sustained government capital expenditure, as noted by Joint Managing Director Sreekanth Reddy. However, these positive indicators were not sufficient to offset the drag from falling margins.
What Were the Key Financial Highlights for FY25?
Sagar Cements’ full-year FY25 performance reflected similar pressure points. Revenue from operations declined 10% to ₹2,258 crore compared to ₹2,505 crore in FY24, while sales volume remained flat at 5.51 million tonnes. The EBITDA for the year plunged 43% year-on-year to ₹14,109 lakh, with EBITDA margin falling to 6% from 10% last year. The net loss for the year widened substantially to ₹21,668 lakh, compared to a loss of ₹5,205 lakh in FY24.
Cost pressures were partially mitigated by operational efficiencies. Freight cost per tonne declined 3% year-on-year to ₹832, and power and fuel costs dropped 10% to ₹1,406 per tonne in Q4. Nonetheless, average realisations fell by 11% year-on-year to ₹3,897 per tonne in Q4 and to ₹4,052 per tonne for FY25 as a whole. These lower realisations remained the single most significant factor eroding margins.
How Did Individual Subsidiaries Contribute to Performance?
Performance across group entities was mixed. The standalone entity, Sagar Cements Limited, recorded a Q4 FY25 operating EBITDA of just ₹834 lakh, a sharp decline of 84% from ₹5,337 lakh in Q4 FY24. This translated into a margin of only 2%, with EBITDA per tonne collapsing to ₹67 from ₹452 a year ago.
In contrast, the Madhya Pradesh-based Sagar Cements (M) Private Limited posted a 74% increase in EBITDA to ₹3,378 lakh with a margin of 25%, driven by a 21% rise in volumes and better plant efficiency. Andhra Cements Limited, however, remained a drag, with a Q4 EBITDA loss of ₹530 lakh and a negative margin of 6%, despite a 5% increase in volumes.
What Are the Strategic Priorities and Capex Plans for FY26?
The company is now banking on cost optimisation and capacity expansion to support a turnaround in FY26. Sagar Cements has earmarked ₹470 crore towards increasing clinker capacity at Dachepalli from 1.85 million tonnes to 2.31 million tonnes and cement capacity from 2.25 million tonnes to 3 million tonnes. This expansion is expected to conclude by FY26-end.
Additionally, the company has launched an ambitious plan to scale up its green power capacity. A 6 MW solar plant was commissioned at Gudipadu in January 2025, and other solar and waste heat recovery (WHR) projects across Mattampally, Dachepalli, and Jeerabad are scheduled through FY29. Total renewable capacity now stands at 30 MW, and green power accounted for 23% of the power mix in Q4 FY25.
Management has guided for FY26 sales volume in the range of 6.0 to 6.3 million tonnes, supported by higher capacity utilisation and efficiency enhancements.
How Are Cost Controls and Green Energy Shaping Future Profitability?
Raw material and power costs showed notable improvement during Q4. Raw material cost per tonne declined by 9% year-on-year to ₹725, while fuel costs fell 10% to ₹1,406, thanks to softening prices of pet coke and imported coal. Despite an 8% increase in employee costs, overall cost per tonne dropped 7% to ₹3,679. These trends are likely to support margin recovery in FY26 if cement prices remain firm.
Moreover, the company’s ESG agenda is expected to play a growing role in long-term cost optimisation. With Science-Based Targets initiative (SBTi)-validated net-zero goals, Sagar Cements plans to reduce Scope 1 and 2 GHG emissions by 18.8% by FY2030 and achieve a 95.1% cut by FY2050. Current gross emission intensity stands at 650 kg CO2/tonne, and the company aims to reduce clinker factor, improve thermal substitution rate (TSR), and enhance the use of alternative materials to drive sustainability-linked cost savings.
What Does the Current Sentiment and Stock Performance Indicate?
As of May 12, 2025, Sagar Cements shares closed at ₹221 on the NSE, valuing the company at approximately ₹2,883 crore. The stock has recovered from its 52-week low of ₹168 (on March 17, 2025) but remains well below the 52-week high of ₹277. The recent weakness in earnings has capped investor enthusiasm, though forward-looking capex and green energy efforts have provided some support to the share price.
The company’s total debt stood at ₹1,42,800 lakh as of March 31, 2025, with a net debt-to-equity ratio of 0.80. Interest coverage and debt service ratios remain under pressure, but a slight sequential improvement in Q4 suggests early signs of financial stabilisation. Institutional ownership stands at 20.59%, while major stakes are held by Ackermans & Van Haaren NV (19.64%) and Premji Invest affiliate PIOF (10.10%).
Will FY26 Be a Turnaround Year for Sagar Cements?
With a clearer focus on green energy integration, cost optimisation, and strategic capacity expansion, Sagar Cements is positioning itself for a potential rebound in FY26. However, any improvement in earnings will hinge on cement price stability, sustained demand growth, and the successful execution of its capital expenditure plans. While Q4 and FY25 results were disappointing on profitability metrics, the company’s operational resilience, expanding ESG credentials, and improving cost dynamics provide a constructive medium-term outlook.
The management’s emphasis on shortening lead distances, reducing clinker usage, and leveraging modern energy sources aligns well with its margin improvement strategy. Should macroeconomic conditions remain favourable and pricing discipline return across cement markets, investors could see a reversal of recent negative sentiment.
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