Nuvoco Vistas Corporation Limited (NUVOCO) Q2 2027 Earnings Call Transcript

Gentlemen, good day and welcome to the Q2 FY27 Earnings Conference Call hosted by Nuwoko Vistas Corporation Ltd. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. I now hand the conference over to Mr. Vishnu Sharma, Head of Investor Relations from Nuwoko. Thank you, and over to you.

Thank you, SSE. So, good afternoon, everyone, and a warm welcome to the Nobukos Vistas and its conference call for the quarter ended September 30, 2026. Before we begin, just wanted to state what we have achieved over the past decade. So, this year, we have completed 10 years in the cement business. What began in 2014 with a single manufacturing operation at Nimble, with 2.3 million tons of cement capacity has evolved into a diversified building materials company spanning cement, ready-mix concrete, and modern building materials. October 2016 marked a defining inflection point with the completion of the acquisition of Lappart. This was followed by the acquisition of Imami Cement in 2020 during the COVID-19 period, which also opened a new phase of growth. The growth agenda was further strengthened with the acquisition of Batra Cement Limited. Today, Nuboko is a diversified manufacturing presence across the east, north, and west, and is well positioned to reach 35 million tons of cement capacity by FY28. We are presenting nearly 15 times growth over the past decade. This journey reflects the commitment of our teams and continued thrust on our customers. Looking ahead, the journey continues, and we have multiple options for growth, including expansion at Gulberga. We need to build up strategic lines from resources, which will give us the raw material security to support sustained growth over the long term. Before we open the floor for questions, I would like to take you through the key developments of the quarter and how the business works. Let me begin with the operating environment, which was challenging. The Middle East Conflict, which towards the end of Q1 and the beginning of Q2 F2B settling, escalated once again. This later shafts, including the pet coke, coal, granules, gypsum, etc. in particular, the previous peaks we witnessed between March and April. The pressure was not limited to the global front, domestically intense and erratic rainfalls, especially in the east brought thermal coal inventories at several power plants across the country to critical levels. As a result, coal supply was prioritized for the power sector. A consequence of this was also reduced rate availability which disrupted the supply chain and also led to the surge in domestic prices of coal. E-option poll. This is also being presented in our investor presentation.

Again, the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Naveen Sahadev from ICSA Securities. Please go ahead.

Yeah, good afternoon, everyone, and thank you for the opportunity. So I had two questions, but more on the cost front. So I'm referring to your slide number 11, wherein we are highlighting Petco prices going up to almost $187. And more importantly, the premiums in Coal India across all the subsidiaries more than doubling or going much higher in some cases. So my first question is, what was our average fuel cost in Q2? I believe in Q1, we were given a number of 1.52. So against that, what was the cost in Q2? And at the current spot rates that we are all worried about, which is 187 and the premiums all along, what will that transpire to on spot rates? I understand inventory comes with a lag, but just to get an impact on our upper end of the spectrum.

Thanks. I guess, first of all, again, just want to proudly inform the 10th anniversary of Nohukov. So, literally, dust salt, maybe salt, baby salt for the company. From a single plant, we are now 12 plants and 2 more in the offering. And I think we are committed to growing this business and contributing to the growth of the country's infrastructure. And we are similarly poised to be a significant player in this category in the coming years. So, coming to the question, you had asked what has been our fuel cost from Q1 to Q2. So, when we did the Q1 earnings call, I had mentioned our fuel costs in Q1 came at 1.52 rupees per million cal, translating to 1005 rupees per ton as energy cost for the company. And what's happened in Q2 is this 1.52 went creeped all the way up to 1.59, and we came with an energy cost of 1080 per ton, technically close to about 80 rupees increase in power and fuel cost for the company in Q2 over Q1. As I also mentioned, as we mentioned in the investors' presentation about the petco prices as we speak and also what could be the petco prices going forward, currently petco prices, spot prices are available at $190 and the current view is going forward. It may even cross $200 per tonne. So if you have to translate the 180 and 187 and 200, excess of $200 per tonne, the rupees per million cal will at 180 and the fuel mix is no co-usage. Just a clarification

that this 1.8 that you are mentioning for Q3 also factors in the surge in premiums for Coal India Coal and all of that, right?

Coal comes under, Clenium is when, Coal India has also come up with, hot buyings and inventory coverage and also some of the linkage coals which we have, which was a little bit of a challenge to procure in Q2 because of the reasons of power plant. Things are slightly easing in the eastern front and coal we expect to be. Conservative local coal is a number which we...

Thank you. I request you to join back the queue, please. Thank you. Ladies and gentlemen, in order to ensure that management is able to answer queries from all participants in the queue, kindly restrict your questions to two at a time. We'll take our next question from the line of Benarkin from HSBC. Please go ahead.

Yeah, thank you very much, sir. So just continuing from the first question, so the energy cost will be around 70 to 80 rupees per ton higher Q on Q, but you should have benefits of higher volumes operating, deleverage, maybe some cost deflation in packaging. So overall, how do you see cost trend in Q3 versus Q2?

Okay, I think I'll just give you a complete picture because I can't give a piecemeal because a number of such questions will come, so I will try and answer the entire cost question that can come in one bucket. First of all, with the cost line in Q2 versus Q1 came up with the following negative number. One is adverse numbers, which I meant power and fuel cost was expensive in Q2 or Q1 by close to about 90 rupees. As well as in our case, because of shutdowns in northern kilns, as well as kilns in Rizda, we also had to do some open market purchase of clinker. That came as a negative of about 60 rupees. Cracking backs in Q2 versus Q1, it increased in granular prices in the early part, came at about 10 rupees. So net-net, we have cost inflation versus Q2 versus Q1, close to both, 180-190 rupees. In comparison to that, in Q2, as we talked about the cost line, power and fuel will come with a delta 70 to 80 rupees more than ones have done, And then, rake availability has also improved in the last two weeks. And hence, the raw material costs in Q3 versus Q2 will be negligible about 10 rupees. So, that should not be a major stuff unless and until we have to get some imported mineral gypsum from Oman. So, that could be only a year. Other than that, I think, the decision surcharge labor, that should be a negative 10 rupees. Net-net, I am looking at a cost inflation of Q3 versus Q2, about 100 to 120 rupees. How do we plan to kind of offset all of it? Because most important thing is while I will say what are the cost stuff, but as you mentioned, the fixed cost leverage which was the case in Q2 will become almost zeroed or positive in Q3 because our volumes will increase when compared to Q2 and we get some benefit of fixed cost. But the most important thing is the agenda of price increase, which we are embarked on. Our price increase, our realization increase will be based on three levers, which was the case in Q2, which was the case in Q1, and it's going to be the case in Q3 as well. The first thing I want to inform the call is we have taken a price increase somewhat after 15th of September, where not trade prices went up about 20 rupees, 20, 25 rupees more than not. We have a trade at correction of 5 to 7 rupees in the north markets in the second half of September. But in October, we already have a 20 rupees price increase in north and north and east and also another 20 rupees price increase in trade prices in east. So the average 20 rupees price increase should totally defray the cost increase and we will have a delta benefit in realization in Cuba.

Thank you. Next question is from the line of Siddharth Merotra from Kotak Securities. Please go ahead.

Thank you for the opportunity. Sir, given the fact that our Surat plant is now operational, could you just tell us what is the capacity utilization level of this plant right now, and what sort of run-head do we anticipate, maybe say one or two quarters down the line?

It's a little bit of premature for me to say capacity utilization of Surat because the baby started working. We're very proud that we commissioned the plant in Q2 in September, We rolled the volume, started getting into the market. As we speak, yesterday was a milestone day for us, where we churned out 3,500 tons of cement in one single day. It was the highest silver production as the capacity of close to about 3,600 yesterday, so obviously all of it will go to the market. But as I mentioned in the previous call, our target is in Q4 of this year. We will get into 2 million ton annualized volume in Gujarat. We are currently about 1.5 million ton annualized, so excess volume will be available in the market in Q4. And since Kach grinding will not be available in Q4, all the incremental 0.5 million annualized volume will come from Suraj grinding unit only in Gujarat. So I am looking at close to about...

So just to say, I have a great question. 0.5 MPPA run rate in 4Q from the Surat plant. Did I hear that correctly? Okay, but our capacity is 2 MPPA, so 0.5 MPPA implies almost 100% utilization.

The plant can run, but I have to sell it in the market as well. So it's kind of a dual phenomena because I'll have to introduce my product in Western Maharashtra, which will happen. And as you, I was anyway, I was from rest of India into the place. So we really have to be, we are not kind of going aggressive in the market. But one and a half which I am selling in Gujarat. Gujarat will also come from Kerch. And the rest of all the capacity which gets released from my Rajasthan plant will be there to fuel my growth in North India. So, the season will peak in Q3 and Q4 in North India. And if I had not had surat, I would have been sold out condition then. Sale would have got impacted based on capacity non-availability. So, I will have a capacity release of close to about a million tons of cement in North from Q4 onwards. So, that volume will be used to sell in North. So, it has to be looked at in both ways. How much incremental sale I get in North and how much incremental sale I get out of surat in Gujarat. Overall, we are looking at, as a company, from the current run rate of million and a half annualized ton per annualized volume, we will go to 2 million tons in Q4 this year.

Understood, sir. Secondly, sir, on our least debottlenecking project, it seems that it's not the primary focus for us, at least this year. So could you maybe tell us what sort of timelines you are looking at in terms of different projects?

Thank you. the expenditure for Kach, Surat and Viram Gham biking terminal this year itself and in H1 of this year, as against the original plan of about 450-460 crores of capex spend, we have gone ahead and spent about 780 crores. We have got 1200 crore capex in the company, out of which 1000 crores will be for Vadraj, 50 crores for Viram Gham and balance for the running operations. So, it will be front-ending the capex, and the balance capex for Badraj will happen next year.

Thank you. The question is from the line of Shravan Shah from Dallas Capital. Please go ahead.

Hi, sir. So, sir, this year, as you said, the 12 crore capex will be there. So, next year, FF28, will it be a kind of a 650, 700 crore kind of capex?

No. Let me just give the details. Next year, FI27H1, we ended up spending 780 crores. And balance, five months, we will do about 420 crores. And FI27 full year, we will spend 1200 crores. And next year, we are looking at 800 to 900 crores as a capex outlay, including, which includes about 800 crore for Kach, Surat, and Sachana, is the bottlenecking as well as the capex for the existing plant. So, I'm looking at 1200 growth this year, anywhere between 800 to 900 next year, net-net two years put together, we're looking at range of 2000 to 2100.

Okay, got it. Second, sir, you have clearly articulated in terms of the 100 to 120 rupees kind of a QOQ increase in cost in third quarter, and in terms of the pricing, 20 odd rupees kind of a price increase likely to be there in the third quarter. So, net-net kind of a, we are looking at a 7TAT rupees kind of a, if the prices remains the same and the costs remains the same, kind of a QOQ improvement in the profitability.

Yeah, I will answer it, obviously, as I said, what I said, one is the cost numbers which I indicated, by and large, we are fairly close to the, because we have adequate fuel stocks, And the rest of the contracts are all lined up, and this is the kind of cost inflation. I'm looking at Q3. We are well into October 20, and then this is the kind of outlook I have for the balance two months. Price increases which we have taken in October 1st, as well as the late September price increase in some markets, and early October and mid-October price increases in the East market. This kind of numbers, I'm assuming, will stick because post-Diwali demand will open up and there will be sufficient pull in the market and I'm hoping the prices, price corrections which we have done will stay put in the balance two and a half months. If the price corrections stay put and the cost I'm more or less certain is 100 to 120 rupees, there will be an improvement in the overall profitability.

Great. Lastly, sir, on the net date front, though it has increased to 5,600 odd crore, so how now, and we have slightly up, interest of the capex has also increased for this year, so how do we see this date for this year, and maybe next year, what's the broader front there?

I will very clearly say that as a management and as I have been attending these calls for a few years now, our stated position has been, we are comfortable anywhere between 3,500 to 4,000 crores, and our commitment is to find a way to get the net debt about, and you would remember, recall, when we did the Vardar acquisition, our company's net debt had already reached about 3,500, and that's when we made the next biggest big investment, and that is how the Thank you.

Next question is from the line of Tejas Pradhan from Citigroup. Please go ahead.

Hi, sir. On the cost bit, just a clarification. So, you mentioned that for our third quarter…

You all speak on the handset, if you can, please, and not speak on the speaker.

Is this better? Is this better?

Yeah, this is better. Please.

Yeah, yeah. So, on the cost bit, you mentioned that third quarter, it would be on a per KKL basis 1.8. And so, the same number for the fourth quarter because your current purchase, as you said, will sit in March, right? So, considering that, what would be that per KKL cost number for fourth quarter?

That will be a little bit of very long-term guidance, and I would refrain from making such a long-term guidance because we will, as I mentioned in the few minutes ago, I said January and mid-February We are already covered with inventory, and the high-cost coal will come only in mid-February till March. So, if I have to stick my neck and say that I am looking at a further increase of about 70-80 rupees in Q4 versus Q3 in the worst-case scenario.

Understood, understood. And in the second quarter, was there any additional cost that we should consider for the Surat grinding unit because volume must not have been significant, right?

The Q2 commissioning happen is the last week of September, hence I don't think we should consider any additional cost. But certainly in Q3, there will be some costs of surat will come, which will be interest charge will come, representation will also come. So, we are looking at close to about 30, 40 crores, which will come. But the volume is also come, scale will happen, and some of it is going to be below the EBITDA line, some of it will be above the EBITDA line. So, net-net, it is not going to dramatically change the overall look and feel of the P&L.

Understood. Thanks.

Thank you. We'll take our next question from the line of Swatika from Nomura. Please go ahead.

Hello. Yes, we can hear you. Thanks for the opportunity. So, my first question is that in the first half, we have seen that the volume growth

in

the first half has been strong for the industry. Now that given the varied monsoon trends, how would we see the rural demand shaping up in the upcoming quarter? That's my first question.

I'm sorry, that's the question you're asking, what will happen to demand in H2 this year, you're asking, I guess.

How do you see the demand trends for rural region?

I still believe that one year of excess monsoon or one year of drought doesn't spoil the overall industry outlook. So, if I have to kind of, I've really looked at last 10, 15 years of how the industry has performed, and because I've done a little bit of work to see demand conditions, and point 8, this is happening in infrastructure ends and the festival ends, I think construction activity will pick up speed. We're optimistic that demand for the industry should be in the range of 7 to 8 percent like before. Maybe it could be a percent here and there, a little bit more. But in North India, India is multiple countries and multiple regions have got different growth rates.

So, my second question is on Vajraj assets. So, it may be too early to ask, but if you could guide us, what would be the EBITDA pattern on these assets, and how much time would it bring to bring these assets to, you know, NuvoCo's standard cost? Okay.

So I will answer this question in two ways. One will be a little bit of a theoretical way because when we made the acquisition and we looked at the market and the opportunity which we have and the value of the asset and the cost of refurbishing the asset and looking at the very realistic growth which Nooku can get in Gujarat as well as Western Maharashtra, We are looking at an EBITDA of Gujarat matching the North EBITDA in year 3, and that should be tallying with NOCO's blended EBITDA at a country level in year 3 of operations, assuming FI 26 is the first year, looking at FI 28 is when the full assets will be shredded and the market will be fully developed, and the EBITDA per ton of Padraaj will match the EBITDA per ton of NOCO in year 3. But that is subject to two things. One is that model we developed based on the prevailing cost structure and prevailing price in the market. That has undergone a little bit of a change, but I am assuming all this cost inflation which has happened due to various pay in the light terms will be offset by price increases in the coming quarter. So in a steady state of next two to three years, cost inflation will be absorbed by the price increase. What will NOCO bring to the table? I explained in the last call. We are uniquely positioned in Gujarat with the bulk terminal very close to Ahmedabad, the Kach grinding unit and the Surat grinding unit and the jetty movement from Kach to Surat as well as the railway movement from Kach to Surat. I think our costs will be under control, and certainly in year 3, which will be FI-29, maybe FI-28, Q4, and then on to 1Q, FI-29. Gujarat and Western Maharashtra EBITDA per ton should match NOCO's all-in-day EBITDA per ton.

Thank you. Next question is from the line of Parth Bhau, sir, from Investec. Please go ahead. Parth, your line is unmuted. Please go ahead with your question. Since there is no response, we'll move on to the next question from Jyoti from Ashika. Please go ahead.

Thank you so much. Good evening and a great set of numbers. I only have one question. What is the reason behind the interest expenses? Apparently, this quarter has actually come down. Do we see the same trend or is it very specific to this quarter? And what has resulted in the reduction of the interest cost while the interest rate...

We just missed your last minute. It kind of broke off. Can you just repeat the question one time, please?

I was asking...

I heard about the interest thing, but then the second part B of your question, so you said what is the reason for the... Why don't you repeat the question, please?

What is the reason for the reduction in this interest expense, and do we expect that this to continue in the subsequent quarters despite increasing interest rates?

So, Jyoti, as you ask this question, so basically, as what Jay mentioned sometime back, the commercial operations for the school of plants started sometime in the last week of September. So, the deficit in charge also will be coming up.

Okay. So, which means that this is very specific to this quarter. We will see impact of interest expense and depreciation going forward, right?

Yes. Predominantly because of this, yeah.

Okay. Okay. Thank you so much.

Yeah. Thank you. Next question is from the line of Shravan Shah from Dalit Capital. Please go ahead.

Hi, sir. Sir, a couple of data points for this quarter. Lead distance, road, rail share, blended cement share.

Okay. Road and rail share is rock solid at 6436. Q1 and Q2 numbers are almost same. So 64 road and 36 rain. A little bit of weak in lead distance. Lead distance has gone up by about 4 kilometers. So 328, which was there, it's gone to 332. And in terms of blended fuel costs in Q2, this is at 1.5 N, which I mentioned, out of which coal comes at 1.47. Good morning, everyone.

And the blended cement, sir, would be 82 odd percent.

Okay, blended, so blending, blended cement ratio is at 83%, that's again 82% last time. CK ratio came at 1.75 in Q2, it was 1.73 in Q1. Thank you. All-time high. As you mentioned, we came at a 45% premium, which is the highest favor in the history of the company. I think that's an agenda which we have been pursuing, and then we'll continue to pursue this agenda going forward as well. We are happy to report our Duraguard, Microfiber, and Concrete Uno, both brands have become 1 million ton brand. In fact, in the entire industry, if there is a premium product in the shortest possible time of less than 18 months, reaching from 0 to 1 million, it is contrary to Uno, we are very proud of.

Lastly, sir, tax rate 41.6% for 1H, so on a reported basis, so for full year, will it, how one can look at, and when it will be a kind of a 25-26% from FF28? Tax rate for 1H was 41.6% on a reported basis, the tax divided by PBT. So, we are evaluating,

we are seeing the tax rate being slightly higher than the normal stuff, at 45% because in the, now to be, thank you, sir.

By the time we reach end of this year, we will have a good fix on, we will move, it's a timing, when will we move is the question, I think in the next three to four months, we will have made a decision, which regime will The question is

from the line of Siddharth Mehrotra from Kotak Securities. Please go ahead.

Thanks for the opportunity, again, sir. Sir, I just wanted to check...

I'm sorry, your audio is not very clear. Can you use your handset mode, please?

Sure thing. Is it better now? Sir, I just wanted to check. A couple of our peers highlighted that there were very strong grains in the East region. So, could you just give us a sense of what was the growth, regional growth in East region versus, say, the North region?

Guidance of regional growth, it will be, I won't be able to share in a forum where what is the regional growth. I think the different dynamics work. Suffice to say, East had erratic monsoon, and in fact, monsoon was heavy in certain states. So, there was a little bit of a sluggishness in demand in East in Q2, but that will go away after the festival season. But net-net, if you see, I think some months we have gone ahead in East, some months we have gone ahead in North. North has been pretty robust in Q2 in terms of volume growth. In fact, at the end, we could get the benefit of growth in North. Overall, I guess, going forward, we still look at anywhere between 8-9% blended between North, West, and East for us.

Understood, sir. And just to confirm, the pricing you were seeing has gone up by around 20 rupees in October versus average prices last quarter. Is that correct? Okay, sir. Thank you.

Thank you. Next question is from the line of Parth Bhav, sir, from Investec. Please go ahead.

Yeah. Hi, sir. Thank you for the opportunity. Sir, I just had one question related to Surat operations. So, since we don't have clinker supply currently, so where are we procuring a clinker from, and what would be the landed cost, and how would it change once we get, you know, supplies from December onwards?

Yeah, I guess this was part of the plan. Since we sequenced Suresh to start first and catch the quantum of work was much more than Suresh. Suresh was the first of the blocking. Less than 12 months, we could commission the plant and commercialize it. That's where Suresh came first. And hence, it was a call that we will move clinker from our Chhattasgarh cluster into Surat. But little bit of an issue we had because of the overall rate non-availability. We ended up moving less clinker from Chhattasgarh into Surat. And then we had to do little bit of a clinker purchase, which I mentioned, and move clinker from North Unit to Surat. So, it's a little bit of a mix and match which has happened, at least in August, September, and trial runs of Azira. We learned how to manage the jetty operations, and as we speak, we are doing the dredging of jetty in Kach, and by first week of December, we'll have operational jetty. So, we should have, once the clinker line starts in Europe this year, we should be moving clinker via jet through the Surat, which is the cheapest form of clinker movement from Kach to Surat. We cut clinker in Surat, and we don't have to bring high-cost clinker from Chathasgarh into Rs. 700 per ton and add freight cost. Obviously, it is a model. Since we have to run, I think it's part of the startup strategy that first few months, we will run the clinker from Chathasgarh.

So, sir, there would be some data because of this into Q3 as well, and then some improvement in Q4. So, what would be that data be from Q3 to Q4?

Can you reach out to Vishnu, and then he will give the exact calculation to you?

Yes, I will do that. Thank you so much.

So, he will be able to give you all the information, because right now I have multiple sources. I have clinker coming from Chathasgarh. I get clinker from Chhita or Kulant also. I also bought Clinker in Q2. So, all these assumptions will change. Currently, we are looking at some bartering of Clinker for Q3. So, all these variables are at play right now. So, for me to give one number will not be right in this call. So, best to reach out to Vishnu, and he will give you a basis and the logic of this calculation.

I'll do that, sir. Thank you so much for answering my questions.

Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Bishnu Sharma for closing comments. Over to you.

Thank you all for your participation. Before we conclude, I would like to leave with a few closing remarks. Quarter after quarter, we have been delivering consistent results despite various challenges and this quarter was no exception. Our continued focus has been on the key levers of premiumization, geo-optimization and operational excellence. As we move forward, we remain committed to strengthening our position and creating sustainable value for our stakeholders. Our growth agenda remains firmly on track with the good projects to further enhance our logistics capability. We are confident in the resilience of your business to navigate the evolving operating environment. Investor Relations team will remain available to address any further... Thank you once again for your time and interest in the company. We look forward to engaging with you in our upcoming interactions. Thank you.

Thank you, members of the management team. On behalf of Novoco Vistas Corporation Limited, that concludes this conference. Thank you all for joining us, and you may not disconnect your lines.