Nuvoco Vistas Corporation hosted a conference call on January 22, 2025. In the conference call the company was represented by Mr Jayakumar Krishnaswamy-MD, Ms Madhumita Basu- Chief Strategy and Marketing officer and Mr Maneesh Agrawal-CFO.

Key takeaways of the call

H1FY2025 macroeconomic environment remained challenging and the India’s GDP growth remained much lower than anticipated due to deceleration in industrial growth and CAPEX. However, high frequency indicators available so far suggest that the slowdown in domestic activity bottomed out in Q2FY2025 and recovered gradually aided by festive demand and pick up in rural activities. A record kharif harvest and increased rabi sowing have contributed to a reasonable performance in agriculture and allied activities leading to an improvement in rural economic fortunes. India continues to be the fastest growing major economy. Although GDP growth moderated to 6.4% in the FY2025 primarily due to lower CAPEX by Center and state government in first half of the fiscal, the real GDP growth for Q1FY2026 is projected at 6.9% and for Q2FY2026 at 7.3%

The union budget for FY2026 is expected to prioritize infrastructure development. Economic experts project a 30% increase in infrastructure allocation reinforcing the sectors critical role in driving the economic growth which augurs well for the cement industry.

Consolidated revenue from operations stood at Rs. 2,409 crores during Q3FY2025. Consolidated EBITDA for the quarter stood at Rs. 258 crores.

Trade share stood at 71% of the total volumes and premium products contribution stood at 39% of the total trade volumes.

Volumes for the quarter stood at 4.7 MMT up 16% YoY.

Realization was lower and declined by 3.6% QoQ. The prices were the lowest

Power and fuel cost: Power and fuel cost declined by 6% QoQ to 1.45 K cal. Continues to be the lowest in the industry and lowest for the last 13 quarters.

Fuel mix was coal 42%, petcoke 48% and AFR 10% for the quarter.

Raw material cost was under control. The company continues to be better placed on slag supply due to long term contract.

Distribution cost: Distribution cost declined by 3% QoQ due to operational efficiency. Lead distance stood at 327 kms in Q3FY2025 as against 330 kms in Q2FY2025.

Bridge 2: Cost savings target under Project Bridge 2.0 on track. Reduced cost in upwards of Rs 50 per ton and expects another Rs 15-20 savings in Q4FY2025.

CAPEX: The company has incurred CAPEX of around Rs 299 crore in 9MFY2025 and the company will incur another R 50-60 crore in Q4FY2025.

Debt: The net debt as on December 31, 2024 stood at 4350 crore. Down by Rs 183 crore YoY. The company remains on course to reduce net debt to below Rs 4000 crore to make further investment.

Going forward, despite investment in VCL all the covenants will be met.

Vadraj Cement (VCL): The company became the successful Resolution Applicant for Vadraj Cement Limited (VCL). A Letter of Intent has been issued.

The company has filed with NCLT and the company expects approval by 8-9 months.

The VCL facility comprises of 3.5 MMTPA clinker unit in Kutch and a 6 MMTPA grinding unit in Surat and reflects the company’s drive for growth and diversification. Production from the facility is expected by Q3FY2027.

It is an opportunity available for the company at a highly competitive cost of US$ 60 per ton.

With this acquisition, the company’s total capacity will reach 31 MTPA, with 19 MTPA in East, 6 MTPA in North and West.

The company will have to pay Rs 1800 crore once the company receives approval by NCLT to the banking consortium and will invest another Rs 900-1200 crore over FY2026 and FY2027. This investment includes setting up of WHRS.

Demand and outlook:

The industry has revived post challenging first half of FY2025. After grappling with subdued demand industry is showing signs of revival driven by improved market dynamics. The company expects pick up in capital expenditure being unspent by both centre and state governments.

Rural housing demand is poised for growth supported by a healthy monsoon. Improved agricultural income and favourable rural consumption to drive construction activities will further boost the industry outlook.

The prices were increased by around December 15, and the realization by end of December increased by 6% of the Q3 average. Further improved demand environment to further boost realizations.

Management commentary:

Commenting on the performance of the Company, Mr.Jayakumar Krishnaswamy, Managing Director, Nuvoco Vistas Corp, stated, The Company proactively seized demand opportunities to bolster its position in the market and delivered strong volume growth during the quarter. Price increases in the recent period continue to reflect a positive trend, while sustained improvements in demand should support prices as well. Strategic priorities for the company remain centered on driving premiumization, optimizing geo-mix, enhancing fuel mix efficiency, strengthening brand presence, and maintaining cost excellence. The Company is confident in its expansion strategy and ability to execute on growth plans pertaining to Vadraj Cement, which will diversify its market footprints in the Western India, thereby supporting long-term growth ambitions and further consolidating its position as the 5th largest player in India.”