Nuvoco Vistas Corp. Ltd’s March quarter (Q4FY26) Ebitda touched a record quarterly high of ₹587.6 crore, aided by better realizations, exceeding Bloomberg’s consensus estimate by 5%. Can this continue amid the prolonged West Asia war fueling input cost inflation?
Elevated costs of petroleum coke (pet coke) and polypropylene bags would increase Nuvoco’s fuel and packaging expenses. In the June quarter (Q1FY27), the management expects blended fuel cost to rise to ₹1.51-1.55 per kcal from ₹1.44, with a probability of further rise in Q2FY27.
Packaging costs rose by ₹20 per tonne in March, followed by another about ₹100 per tonne impact expected in April. Mineral gypsum costs are also higher due to supply disruptions from Oman. Overall, Nuvoco is bracing for a ₹200 per tonne cost inflation pinch to reflect in FY27.
Sure, it took a blended price increase of ₹8-12 a bag and ₹10-15 a bag in the trade and non-trade segments, respectively, across its east and north India markets. It is also optimizing costs. It aims to replace the share of high-cost pet coke with low-cost domestic coal and alternative fuel resources (AFR). Nuvoco’s Q4FY26 fuel mix comprised around 53% coal, 37% pet coke and 10% alternative fuel resources (AFR).
Nuvoco is not keen on sacrificing profitability for market share, so if costs keep rising, it may need to raise prices further.
It is likely that other cement companies, too, have hiked prices to fight rising costs. But any slowdown in government-led infrastructure capex and subdued traction in individual home building segment amid broader inflationary pressures, could hurt demand, making price hike absorption challenging. Over 70% of Nuvoco's installed capacity is in the east, where competition is intense and influx of new supply could restrict pricing power.
Cement volumes rose 5% year-on-year to 5.98 million tonnes in Q4FY26, as demand was aided by government-led spending. It eyes 7-9% growth in FY27, in line with industry’s volume growth. A meaningful re-rating hinges on ramp-up of Vadraj Cement asset; clinker and grinding units will be commissioned in phases between Q3FY27 and Q1FY28, enhancing Nuvoco's presence in the west.
However, Antique Stock Broking cautions that profitability from the Vadraj unit may be lower than Nuvoco’s average, given initial start-up costs and lower utilisation. So, Nuvoco's profitability gap versus peers may not narrow in the near-term. The stock has declined 11% so far in 2026, and trades at FY28 EV/Ebitda of 7x, as per Bloomberg. Valuations seem inexpensive, but triggers are limited.