INDIACEM Q2 FY27 Earnings Call: 13.8% Volume Growth Outpaces Industry, Reaffirms Rs. 1,400/Tonne EBITDA Exit Target

INDIACEM held its Q2 FY27 earnings call on October 17, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Volumes Lead, Costs Bite, Profit Still Grows

• 13.8% volume growth in Q2 FY 2026-2027, ahead of management-cited industry demand growth of close to 10%; regional split: North >20%, South 15-20%, East ~5%, West ~10%, Central ~10%.
• 71% capacity utilisation vs 66% in Q2 FY 2025-2026; North and South upwards of 70%, West close to 70%, Central and East around 60% (East hit by prolonged monsoons).
• Net profit rose 21% in Q2 FY 2026-2027, aided by operating leverage: other fixed costs per ton fell 6% YoY as absolute fixed costs grew only 4% against 13.8% volume growth.
• Fuel and raw material costs rose ~13% QoQ (fuel ~3%) in Q2 FY 2026-2027; fuel cost per bag rose from Rs.45 to Rs.51.5 YoY, with fuel rates at about Rs.2.09 per Kcal, attributed to the West Asia crisis.
• Interest costs rose ~22% QoQ in Q2 FY 2026-2027 due to ~Rs.5,000 crore of NCDs raised at 7.25% outstanding for 2 months; CFO characterised the timing as favourable in hindsight.
• Tamil Nadu levy of Rs.160/tonne was fully accounted for in Q2 FY 2026-2027; CFO Atul Daga confirmed no reversal or relief is expected and no additional cost will be incurred from the effective date onwards.

Prices "Leading the Way" But Fuel Risk Persists

• Pan-India trade prices stable vs Q1, with the Q2 FY 2026-2027 quarterly average 1-1.5% lower due to a soft August; prices rose Rs.7-10 per bag MoM in H2 September, exiting ~3% above the Q1 FY 2026-2027 average.
• Spot realisations ~5% higher than the Q2 FY 2026-2027 average, per management; more price improvement expected in Q3 FY 2026-2027 as October increases flow through with a lag.
• Pet coke at $180/ton as of the call date (October 2026); management indicated a possible additional Rs.10-20 per bag cost increase (period unspecified); pet coke trading around $170-180 per tonne with the company reducing pet coke to ~25% of its fuel mix.
• Kcal cost of Rs.2.2 expected to sustain for the whole of H2 FY 2026-2027 assuming crude stays at $180; CFO flagged risk that if crude moves from 180 to 300 this could change. CFO declined to disclose whether low-price fuel or polymer contracts exist that could improve the cost curve in H2 FY 2026-2027.
• EBITDA per ton expected higher YoY in Q3 and Q4 FY 2026-2027 — management intends September/October price increases (with further increases thereafter) to absorb costs; only a marginal cost impact expected in Q4 FY 2026-2027 due to pipeline inventory.
• Rs.1,400/ton EBITDA exit-rate target reaffirmed — CFO Atul Daga said under "business as usual" management expects to deliver the Rs.1,400/ton EBITDA exit rate by March 2028 (Q4 FY 2027-2028), with any cost pressures covered by price increases.
• CFO declined to give a definitive view on whether elevated costs have peaked, citing macro uncertainty.

204.7MT In Place; Organic Expansion Beyond 240MT Being Readied

• 4.6 million tons commissioned in September (Q2 FY 2026-2027), taking domestic cement capacity to 204.7 million tons, including a 3.6 million ton greenfield at Petni Kota, Andhra, and 1 million ton of debottlenecking at three units; on track to reach 240 million tons as planned (period unspecified).
• Next phase of organic growth beyond 240MT — management is preparing to announce an organic (not inorganic) growth plan, being detailed before execution, with execution historically delivered within committed timelines and costs (period unspecified).
• North region flagged for incremental expansion — consistently operating at fairly high utilisation; detailed plans to be announced before the end of FY 2026-2027.
• ~Rs.13.4 lakh crore of project announcements (~100 projects) by early September FY 2026-2027, including Tamil Nadu's Rs.55,000 crore power plant, the Rs.65,000 crore Gorakhpur Industrial Park, and Assam's Rs.50,000 crore five-year infra program; road construction was weak in Q2 FY 2026-2027 but new awards have picked up.
• Industry growth assumption of 7-8% for FY 2026-2027 reaffirmed (double-digit for UltraTech) — Q1 FY 2026-2027 industry grew 6.5%, Q2 estimated at ~9%, implying H1 at ~7.5-8%; management expects very strong cement consumption momentum through March 2029, citing data centers, semiconductors, private capex, urban housing and ~8 metro rail extensions announced by the government.
• Trade ratio stable at 65-67%; for FY 2025-26 (year ended March 2026), industry sales were 463-465 million tons vs the company's ~140-145 million tons.
• H1 FY 2026-2027 capex stood at Rs.5,882 crore; full-year FY 2026-2027 guidance maintained at Rs.10,000 crore (plus/minus), with a firmer number advised after Q3 FY 2026-2027 results.

Early Ramp-Up; Rs.1,800 Cr Committed, Maturity Expected FY 2027-2028

• Rs.1,100 crore spent/committed of the board-approved Rs.1,800 crore capex (balance over H2 FY 2026-2027); no additional capex sanctioned — faster growth refers to ramp-up pace, not incremental capex.
• Revenue target effectively raised to Rs.16,000-18,000 crore — the original Rs.10,000 crore target (set February 2025 at prevailing copper prices, at full ramp-up) has risen on an "autopilot" basis depending on copper prices; management did not dispute an analyst framing of up to Rs.17,000-18,000 crores (period unspecified).
• 80,000+ retail points and 1,500+ channel partners signed up since the 3 September launch; distribution spans 15,000 pin codes with occasional stock-outs as production has not yet ramped up.
• 78,000 tons annualised copper consumption capacity — already number two in its space by installed capacity without further investment; remaining power and control cable lines to be commissioned in H2 FY 2026-2027.
• FY 2027-2028 should be a matured business for the division, per management; CFO declined utilisation/margin specifics, saying the business is only ~25 days old and Q1 FY 2027-2028 (April-June 2027) "will be a quarter worth talking about".
• ROCE question deflected — analyst cited company ROCE of 11-13% in FY 2026-2027 vs wires and cables at 22-23%; management said it is not playing the business from a ROCE-averaging point of view and views the space as synergistic, with market share coming naturally.
• Pricing at market parity — no undercutting; differentiation via the class 5 insulation / e-beam product (commands a premium) and Green Core, the entry-level class 5 HRFR product; PVC conduit is the immediate adjacent product, with fans, tube lights, decorative lighting and bulbs explicitly ruled out.

South Sold Out; Upgrades Target Four-Digit EBITDA/Tonne

• South capacities fully sold out in Q2 FY 2026-2027 despite muted infrastructure activity; volumes grew 15-20% on a South capacity base of 50 million tons, which is growing.
• South softness attributed to temporary factors — an aggregates crisis in Kerala and Karnataka and movement bans in Tamil Nadu; growth drivers cited: Chennai's next metro phase, Tamil Nadu housing, the auto sector, and data centers (period unspecified).
• India Cements at Rs.500/tonne EBITDA in their books — management stated it will gain significant cost improvement to take this to a four-digit (per tonne) mark, driven by major kiln shutdowns for upgradation (WHRS coolers, increased preheater height).
• January-March FY 2027-2028 committed as "a fabulous quarter" for India Cements by the CFO, tied to these upgrades; a "big delta improvement" in profitability expected once the refurbishment/retrofit is completed (timeline unspecified).
• South profitability expected to reach parity with the all-India average and other profitable regions, per CFO Atul Daga (timeline unspecified); management expects South/East price and profitability improvement to be a gradual ramp-up linked to demand.
• UBS outlets >25% of trade sales currently (Q2 FY 2026-2027); network at ~6,500 stores with a target of 10,000 stores by FY 2028-2029 (next 2-3 years).
• Q2 FY 2026-2027 product mix: premium cement share at 37%; blended cement share at 67.3%.

Leverage To Sub-1x By March 2027; Season Strongest Ahead

• Net debt/EBITDA rose to 1.24-1.26x at end of September (Q2 FY 2026-2027) from 0.94x at end of March FY 2025-2026, driven by capex and a dividend payment; management expects to be below 1x by end of March FY 2026-2027.
• Green power additions of 116 MW renewable and 10 MW waste heat recovery in Q2 FY 2026-2027; 47% of power needs met from non-fossil sources; 2 gigawatts of renewable green power achieved for captive consumption; thermal substitution rate at ~7.2%.
• AI being used to reduce operations costs across manufacturing and logistics, per the CFO on FY 2027-2028 cost initiatives, though benefits are "not quantifiable at the moment".
• Strongest season expected ahead — activity picking up mid-November (Q3 FY 2026-2027) after Chhath Puja; management does not expect H2 FY 2026-2027 to be free of cost pressures but commits to managing them better than peers.
• Rural demand watch — weakest monsoon since 2015 supported Q2 volumes via fewer rain-loss days, but management expects rural demand might soften in some areas with a lag, cushioned by non-crop activities contributing ~40% of the rural economy; management hopes/expects new MGNREGA programs from the government could improve rural cash flows, though drought pockets persist in South Maharashtra.
• Cement in a "very sweet spot" — management expects good volume growth over the next 2.5-3 years, till March 2029 (spanning FY 2027-2028 and FY 2028-2029), which it views as the biggest driver for cement players.
• UHG Holdings guarantee — UHG (UltraTech 41%, Grasim 9%, Hindalco 50%) will borrow against the guarantee to buy aircrafts and ships for business use; the guarantee helps UHG secure finer interest rates.