Nuvoco Vistas Q2 FY27 Earnings Call: Targets 35 MT Capacity By FY28, Rs. 20/Ton Hike Defrays Q3 Inflation

Nuvoco Vistas Corporation Ltd held its Q2 FY27 earnings call on October 22, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Resilient Quarter Despite Cost and Monsoon Headwinds

• Volume +9% YoY, revenue ~+14% YoY, EBITDA +11% YoY — Q2 FY 2026-2027 delivered despite a challenging quarter; premiumisation mix hit a historic high of 45% while trade mix held at 75%.
• Premium products at an all-time-high 45% — highest ever in company history; Duraguard Microfiber and Concrete Uno each became 1 million tonne brands, with Uno going from 0 to 1 million tonnes in under 18 months, which management described as the fastest for any premium product in the entire industry.
• Net cost inflation of ~Rs.180-190/ton in Q2 FY 2026-2027 vs Q1 — power & fuel up ~Rs.90/ton, raw material up ~Rs.60/ton on open-market clinker purchases (northern kiln and Risda kiln shutdowns), packing bags up ~Rs.10/ton.
• 1H FY 2026-2027 tax rate elevated at 41.6% (tax/PBT) vs 35% in the normal course, because MAT paid under the new act is not allowed to be set off; management did not confirm an analyst's suggested normalisation to 25-26% from FY28.
• Decade milestone — 10 years in cement, from a single 2.3 million ton operation at Nimbol (2014) through the Lafat (Oct 2016), Imami Cement (2020) and Batra Cement acquisitions; now 12 plants with 2 more in the offering (timeline not specified).

Surat Commissioned, Kutch Sequenced, 35 MT Roadmap

• 2 million ton Surat grinding unit commissioned in Q2 FY 2026-2027 (last week of September); highest-ever single-day production of 3,500-3,600 tons as of the call date against ~5,500 tons/day (~2 MTPA) capacity.
• Management stated Nuvoco is "well positioned" to reach 35 million tons of cement capacity by FY28 — nearly 15x growth over the decade — with options including expansion at Gulbarga and in the north, plus continued build-up of strategic limestone resources.
• Gujarat volumes ~1.5 million tons annualized currently; management targets 2 million tons annualized in Q4 FY 2026-2027, with the incremental 0.5 million tons from Surat as Kutch grinding will not be available in Q4 FY 2026-2027; Surat utilization guided at ~50-60% in Q4 FY 2026-2027, rising to ~70-75% in FY 2027-2028.
• Surat clinker sourcing was a planned startup sequence, not a surprise — Surat was deliberately sequenced ahead of Kutch and commercialized in less than 12 months; rake non-availability from Chhattisgarh forced a mix-and-match of purchased and north-unit clinker through August-September (Q2 FY 2026-2027) and the first week of October (Q3 FY 2026-2027), at ex-factory clinker rates of ~Rs.3,600-3,700 per tonne — with freight, "not an economical model".
• Kutch jetty on track — trial runs from Kutch into Hazira successfully completed; operational jetty expected by the first week of December (Q3 FY 2026-2027), with sea/barge clinker movement from Kutch to Surat — the cheapest form of clinker movement — expected in Q4 FY 2026-2027.
• East expansion/debottlenecking re-sequenced by 6-8 months — from Q3/Q4 FY 2026-2027 to Q1/Q2 FY 2027-2028 — to prioritise Vadraj completion and preserve cash flow and bandwidth for the Vadraj integration.
• Renewables — agreement executed with GreenMax in Q2 FY 2026-2027 for a 46.4 MW wind-solar hybrid project in Rajasthan, expected to generate ~100 million units of renewable electricity annually once operational (period unspecified).

Fuel Inflation Builds Through H2 FY 2026-2027

• Blended fuel cost rose to Rs.1.59/million cal in Q2 FY 2026-2027 (energy cost Rs.1,080/tonne, ~Rs.80/tonne QoQ increase) from Rs.1.52/million cal (Rs.1,005/tonne) in Q1 FY 2026-2027.
• Q3 FY 2026-2027 blended fuel cost guided at Rs.1.8/million cal — up Rs.0.21/million cal QoQ, translating to Rs.70-80/tonne higher energy cost; guidance factors in Coal India auction premiums (including a 5 lakh-tonne auction ~2 weeks prior), spot buys, inventory coverage and judicious AFR use.
• Pet coke spot at $190/tonne; management's current view is prices may cross $200/tonne in the near term (FY 2026-2027) — uncovered buying at $187-190 would cost ~Rs.2.50/million cal, rising to Rs.3/million cal at $215/tonne.
• Coverage adequate for Q3 FY 2026-2027 at Rs.1.8/million cal; Q4 FY 2026-2027 fuel is booked for January to mid-February, so the full impact of $200/tonne pet coke hits only in March 2027 (Q4 FY 2026-2027); for Q4 FY 2026-2027 management declined firm guidance but indicated a worst-case cost increase of Rs.70-80 vs Q3.
• Q3 FY 2026-2027 net cost inflation guided at ~Rs.100-120/ton — power & fuel +Rs.70-80/ton, packing bags +Rs.20/ton, busy season surcharge return ~Rs.10/ton (waived in Q2), raw material ~Rs.10/ton; fixed-cost leverage expected to turn "almost zero or positive" in Q3 as volumes rise.
• AFR share (6% in Q2) guided to increase in Q3 FY 2026-2027 as the Risda kiln resumes after shutdown; fuel mix in Q2 was coal 66%, pet coke 27%, AFR 6%.

Rs.20/ton Hike Expected to Defray Q3 Inflation

• October 2026 (Q3 FY 2026-2027) prices up ~Rs.20 vs the Q2 FY 2026-2027 average — confirmed by management; a Rs.20/ton increase is already in place in non-trade North, non-trade East, plus a further Rs.20/ton in trade East.
• Post-15th September (Q2) actions — non-trade prices raised Rs.20-25/ton in the North while trade prices corrected Rs.5-7/ton in North markets in the second half of September.
• Management expects the average Rs.20/ton increase to fully defray Q3 FY 2026-2027 cost inflation, delivering a positive realization delta in Q3 vs Q2; if increases stick alongside the Rs.100-120 cost inflation, Q3 profitability improves QoQ.
• Surat-related interest and depreciation of close to Rs.30-40 crores to flow in Q3 FY 2026-2027, split partly above and partly below the EBITDA line; management noted Surat volumes will also build, so the net impact is not expected to dramatically change the overall P&L.
• Q2 interest expense was temporarily lowered by capitalization of borrowing costs after Surat commercial operations commenced in the last week of September; interest cost and a depreciation charge will become visible in the P&L quarter on quarter in subsequent quarters of FY 2026-2027.
• Q3/Q4 earnings delta not quantified — the Managing Director declined to give a number for the potential Q3 dent and Q4 improvement, citing multiple variables (Chhattisgarh clinker, Chittor plant, Q2 clinker purchases, clinker bartering being evaluated for Q3 FY 2026-2027).

East Sluggish on Monsoon, North Robust

• East demand sluggish in Q2 FY 2026-2027 due to an erratic monsoon that was heavy in certain states (analyst Siddharth Mehrotra cited peers flagging very strong rains in the East); management expects this to fade after the festival season.
• North delivered robust volume growth in Q2 FY 2026-2027, supporting overall growth; management declined to disclose specific region-wise figures.
• Management continues to expect blended demand growth of 8-9% across North, West and East for the company going forward (period unspecified).
• ~8% blended all-India industry cement demand growth expected in H2 FY 2026-2027, within a broader industry range of 7-8% (period unspecified), as construction picks up post-monsoon/festival season; management cited India's growth at 7.8% as supportive.
• Historical data review (last 10-15 years) — back-to-back years of excess monsoon/drought can impact industry demand to ~5%; management assumes such a scenario does not happen in FY 2027-2028.
• Logistics metrics broadly steady — road/rail split at 64%/36% (unchanged vs Q1 FY 2026-2027); lead distance rose ~4 km to 332 km; blended cement ratio 83% (vs 82% in Q1); clinker ratio 1.75 (vs 1.73 in Q1).

Front-Loaded Capex Lifts Net Debt; Convergence Targeted by FY28

• FY 2026-2027 capex guided at Rs.1,200 crore — Rs.780 crore already spent in H1 (vs Rs.450-460 crore planned), ~Rs.420 crore over the remaining months (Rs.1,000 crore for Vadraj, Rs.50 crore for Viramgam, remainder for running operations); FY 2027-2028 capex guided at Rs.800-900 crore; two-year outlay of Rs.2,000-2,100 crore.
• Net debt crossed Rs.5,000 crore at September-end (Q2 FY 2026-2027), up ~Rs.500 crore from ~Rs.4,500 crore at March 2026 (FY 2025-2026 year-end); drivers were ~Rs.200 crore working-capital increase from pet coke stocking and H1 capex of Rs.780 crore vs Rs.450 crore planned.
• Net debt expected to return to ~Rs.4,500 crore by end of FY 2026-2027 — via H2 working-capital release, seasonally stronger cash generation and ~Rs.480-500 crore capex over the next four months; over the next 4-6 quarters (through roughly FY 2027-2028), net debt to hover between 2-2.5x EBITDA.
• Commitment reiterated — comfort with net debt between Rs.3,500-4,000 crore and bringing net debt below ~2x EBITDA once Vadraj volumes are absorbed and Vadraj cement is scaled up (timing unspecified); net debt had reached ~Rs.3,500 crore at the time of the Vadraj acquisition.
• Vadraj EBITDA convergence targeted in year three — assuming FY26 as the first year of operations, management targets the market fully developed by FY28, with Vadraj EBITDA per tonne matching Nuvoco's all-India EBITDA per tonne around Q4 FY28 to Q1 FY29; no specific EBITDA per tonne figure was quantified, and the convergence model was built on a cost structure and prices that have since changed.
• Gujarat cost advantages cited — a bulk terminal very close to Ahmedabad, the Kutch and Surat grinding units, and jetty plus railway movement from Kutch to Surat, which management expects will keep costs under control; the Sachana berth terminal is expected to further enhance logistics capability (timeline unspecified).