KCP - K C P

📊 NSE: KCP 🏢 Cement - South India 📅 Last Updated: 12/14/2025 8:45

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue decreased by 11.15% YoY to INR 2,528.94 Cr in FY25. Standalone revenue fell 18.13% to INR 1,393.42 Cr. For H1 FY26, Cement revenue was INR 469.98 Cr, Sugar INR 103.12 Cr, and Hospitality INR 2.85 Cr.

Geographic Revenue Split

Approximately 80% of cement sales are concentrated in Andhra Pradesh and Telangana. The Vietnam sugar segment contributes between 35% and 45% of total consolidated revenue.

Profitability Margins

Consolidated PAT margin improved slightly to 10.0% in FY25 from 9.9% in FY24. Standalone operations reported a loss before tax of INR 5.27 Cr in FY25 compared to a profit of INR 61.68 Cr in FY24, a decline of 108.5%.

EBITDA Margin

Consolidated PBDIT (EBITDA) was INR 366.90 Cr in FY25, a 13.28% decrease from INR 423.10 Cr in FY24. The EBITDA margin stood at 14.5% in FY25. Rating agencies target a sustained margin of over 20% for an upgrade.

Capital Expenditure

Planned capex of INR 750-850 Cr for the FY26-FY28 period, focusing on a 16 MW Waste Heat Recovery System (WHRS), railway siding for cement, and a 4,000 TPD sugar capacity expansion in Vietnam.

Credit Rating & Borrowing

Maintains a 'Stable' outlook from CRISIL. Adjusted interest coverage improved to 11.71x in FY25 from 10.22x in FY24. Borrowing costs are managed through a standalone interest expense of INR 22.35 Cr in FY25.

⚙️ Operational Drivers

Raw Materials

Key raw materials include Sugarcane for Vietnam operations and Limestone and Coal for cement production. Coal prices traded in the range of 95 USD per ton during the period.

Import Sources

Coal is imported to support cement operations, with hedging policies in place to manage price volatility. Sugarcane is sourced from local regions in Vietnam.

Capacity Expansion

Cement capacity is 4.645 MTPA (Macherla 0.825, Muktyala 3.52, Arakkonam 0.3). Sugar capacity in Vietnam is 11,000 TPD, with a planned expansion of 4,000 TPD and a 45 MW biomass plant expansion.

Raw Material Costs

Raw material costs are impacted by international sugar price realizations and imported coal prices. Gross margins in the sugar segment increased in FY25 due to higher price realizations.

Manufacturing Efficiency

Cement capacity utilization declined to 63% in FY25 from over 75% in FY24 due to muted demand and a strategic exit from non-core markets.

Logistics & Distribution

Completion of the railway siding is expected to significantly improve distribution efficiency and market reach in the southern cement market.

📈 Strategic Growth

Expected Growth Rate

12-15%

Growth Strategy

Growth will be driven by a 36% capacity expansion in Vietnam sugar (4,000 TPD), commissioning of a 16 MW WHRS to lower cement production costs, and the completion of railway sidings to improve cement volume dispatches in core markets.

Products & Services

Final products include Cement bags, refined Sugar, heavy engineering castings, skid-based equipment for the Indian Navy, and hospitality services via the Mercure Hotel.

Brand Portfolio

KCP Cement, KCP Sugar, Mercure Hyderabad City Centre, and Fives-Cail KCP.

New Products/Services

Recently fabricated skid-based equipment with connected piping and instrumentation for BARC/Indian Navy, marking an entry into strategic defense fabrication.

Market Expansion

Focusing on consolidating the market position in Andhra Pradesh and Telangana for cement and expanding the sugar footprint in Vietnam.

Market Share & Ranking

Holds a strong market position in the South Indian cement segment and is a leading sugar producer in Vietnam.

Strategic Alliances

Operates a Joint Venture, Fives-Cail KCP Limited, for heavy engineering and a subsidiary, KCP Vietnam Industries Limited, for sugar operations.

🌍 External Factors

Industry Trends

The cement industry is facing a demand-supply mismatch in South India, leading to lower utilization (63%). The sugar industry is benefiting from strong international prices and a shift toward biomass energy.

Competitive Landscape

Faces intense competition from large pan-India cement players in the South and unorganized players in the heavy engineering sector.

Competitive Moat

Moat is built on a 60-year track record in cement and a dominant, low-cost production position in the Vietnam sugar market, supported by integrated biomass power.

Macro Economic Sensitivity

Highly sensitive to infrastructure spending in South India and global sugar commodity price cycles.

Consumer Behavior

Shift toward preferred business hotels in Hyderabad, benefiting the Mercure brand which saw 84% occupancy.

Geopolitical Risks

Exposure to regulatory changes in Vietnam's sugar industry and trade remedies affecting international sugar prices.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to environmental pollution norms for cement plants and sugar industry regulations in Vietnam.

Environmental Compliance

Investing in WHRS and biomass plants to meet ESG standards and reduce carbon footprint, which is critical for maintaining access to domestic capital markets.

Taxation Policy Impact

Effective tax rate is reflected in the difference between PBT of INR 249.95 Cr and PAT of INR 147.09 Cr for FY25 (approx. 41% including non-controlling interests).