KAKATCEM - Kakatiya Cement

📊 NSE: KAKATCEM 🏢 Cement - South India 📅 Last Updated: 12/14/2025 8:46

💰 Financial Performance

Revenue Growth by Segment

Total income for Q2 FY26 was INR 2,540.57 lacs, representing a 15.27% increase YoY from INR 2,203.97 lacs. However, half-year revenue ended 30.09.2025 was INR 5,096.54 lacs, a 2.12% decline from INR 5,206.81 lacs in the previous year. Segment-specific revenue growth percentages were not disclosed, though cement production volume fell 46.8% YoY to 1,29,778 MT.

Geographic Revenue Split

100% of revenue is generated from the states of Telangana and Andhra Pradesh, as market operations are restricted to these two regions.

Profitability Margins

The company reported a net loss margin of -45.2% for Q2 FY26 (INR 1,148.64 lacs loss on INR 2,540.57 lacs income), a significant deterioration from the 3.1% net profit margin recorded in Q2 FY25.

EBITDA Margin

Not explicitly disclosed; however, the Profit Before Tax (PBT) margin for Q2 FY26 was -44.8% compared to a positive 3.07% in Q2 FY25, indicating a severe decline in core operational profitability.

Capital Expenditure

Historical and planned capital expenditure is INR 0 Cr for the immediate future, as the company explicitly stated it has no immediate plans for expansion.

⚙️ Operational Drivers

Raw Materials

Limestone, Coal, and Sugarcane are the primary raw materials required for the Cement and Sugar divisions, though their specific percentage of total costs was not disclosed.

Capacity Expansion

Current cement production is 1,29,778 MT (down 46.8% YoY from 2,44,020 MT). There is 0% planned expansion as the company intends to focus on optimally utilizing existing capacity.

Raw Material Costs

Not disclosed in available documents; however, raw material availability and price volatility are cited as key operational risks.

Manufacturing Efficiency

Manufacturing efficiency has declined as cement production volume crashed 46.8% YoY to 1,29,778 MT, leading to under-absorption of fixed costs.

📈 Strategic Growth

Expected Growth Rate

Growth Strategy

The company is not pursuing expansion; instead, it aims to achieve growth through the optimal utilization of existing production capacity to cater to the requirements of Telangana and Andhra Pradesh. It is also focused on resolving complicated regulatory and legal issues in the sugar and power divisions through government negotiations and legal liaison.

Products & Services

Cement bags, Sugar, and Power (Electricity).

New Products/Services

No new product launches mentioned; expected revenue contribution is 0%.

Market Expansion

None; the company intends to remain restricted to the states of Telangana and Andhra Pradesh.

Strategic Alliances

None mentioned.

🌍 External Factors

Industry Trends

The cement, sugar, and power industries are core sectors with low product substitution risk. However, the industry is currently facing cyclical headwinds and regulatory complexities, particularly in power division litigations and sugar division government negotiations.

Competitive Moat

The company possesses a regional moat based on its established presence in the Telugu states and the core necessity of its products. However, this moat is challenged by a lack of expansion and a 46.8% decline in production output.

Macro Economic Sensitivity

High sensitivity to regional GDP growth in Telangana and Andhra Pradesh, construction sector demand, and cyclical pricing in the sugar industry.

⚖️ Regulatory & Governance

Industry Regulations

Operations are heavily influenced by governmental regulations in the sugar and power sectors, requiring ongoing negotiations with authorities to resolve 'complicated issues'.

Environmental Compliance

The company maintains a continuous green belt development program through the planting of saplings and seedlings around factories and colonies.

Legal Contingencies

The company faces pending litigations specifically concerning the power division; however, the exact case values in INR were not disclosed.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainties are the 46.8% crash in cement production volume and the resolution of pending litigations and regulatory issues in the power and sugar divisions.