NCLIND - NCL Industries

📊 NSE: NCLIND 🏢 Cement - South India 📅 Last Updated: 12/14/2025 10:26

💰 Financial Performance

Revenue Growth by Segment

The Cement segment is the primary driver, contributing 84.26% of total sales in FY24 (down slightly from 84.74% in FY23). Revenue grew 16.4% YoY from INR 1,609 crore in FY23 to INR 1,871 crore in FY24. However, revenue declined by 24.7% to INR 1,411 crore in FY25 due to lower realizations and muted demand in key operating states.

Geographic Revenue Split

Operations are heavily concentrated in South India, specifically Andhra Pradesh and Telangana, which account for the majority of the revenue. Specific percentage splits per state are not disclosed, but the company relies on an established dealer network in these two regions.

Profitability Margins

Operating margins improved from 9.5% in FY23 to 11.1% in FY24 due to softening raw material and fuel costs. Net Profit Margin (PAT) improved from 2.75% in FY23 to 4.97% in FY24. In FY25, PAT margin compressed to 1.79% (INR 25 crore) due to a sharp reduction in cement realizations.

EBITDA Margin

PBILDT margin stood at 11.32% in FY24 (INR 212.26 crore), up from 9.47% in FY23 (INR 152.80 crore). This 185 basis point improvement was driven by better operating efficiencies and lower power costs, though it moderated to 10.1% in H1FY25.

Capital Expenditure

The company is undertaking a debt-funded capital expenditure of INR 150 crore to increase cement capacity by 6.6 lakh tonnes per annum at its Visakhapatnam unit. This is funded by a term loan of INR 90 crore and internal accruals.

Credit Rating & Borrowing

CRISIL reaffirmed 'CRISIL A/Stable' for long-term facilities and 'CRISIL A1' for short-term facilities as of June 2025. Borrowing costs are supported by a healthy gearing of 0.26x-0.29x and an interest coverage ratio of 9.09x in FY24, though coverage is expected to moderate to above 7x over the medium term.

⚙️ Operational Drivers

Raw Materials

Limestone (captive), Coal/Petcoke (fuel), Fly ash, Gypsum, and Diesel (logistics). Limestone is sourced from captive mines, while coal and petcoke prices fluctuate based on global market trends.

Import Sources

Limestone is sourced locally from captive mines in Mattapally and Visakhapatnam (Andhra Pradesh). Coal and petcoke are sourced through a mix of domestic linkages and imports, though specific countries are not listed.

Key Suppliers

Not specifically named in the documents, but the company utilizes captive limestone mines and has acquired Vishwamber Cements Ltd (VCL) specifically to secure 322 acres of limestone lease land.

Capacity Expansion

Current cement capacity is approximately 3.0 MTPA with a 96% utilization rate. Expansion of 0.66 MTPA (6.6 lakh TPA) is underway at the Vizag unit, expected to commence operations in the second half of FY26, bringing total capacity to 3.66 MTPA.

Raw Material Costs

Raw material and power costs moderated in FY24, aiding a 150-200 bps margin improvement. However, the company remains susceptible to volatility in coal and petcoke prices, which can fluctuate by 10-20% annually, impacting the cost of production per bag.

Manufacturing Efficiency

Capacity utilization is high at 95-96% for cement and boards. Efficiency is supported by captive limestone mines located adjacent to the Mattapally unit, reducing lead distance and handling costs.

Logistics & Distribution

Susceptible to diesel price fluctuations. The company uses a mix of road and rail for distribution, with logistics costs being a significant component of the total cost structure given the weight-to-value ratio of cement.

📈 Strategic Growth

Expected Growth Rate

15-20%

Growth Strategy

Growth will be achieved through the 0.66 MTPA capacity expansion in Visakhapatnam, targeting a recovery in realizations in FY26. The strategy includes increasing market share in the RMC and Doors segments and leveraging the 'Nagarjuna' brand equity to maintain high utilization rates above 90%.

Products & Services

Cement bags (OPC, PPC), Cement-bonded particle boards, Ready-Mix Concrete (RMC), and Prefabricated doors.

Brand Portfolio

Nagarjuna Cement, Nagarjuna RMC, Bison Panels, and NCL Doors.

New Products/Services

NCL Doors and expanded RMC capacities are expected to contribute to diversified revenue streams, though cement remains the core contributor at 84% of sales.

Market Expansion

Focusing on deepening penetration in the Visakhapatnam region following the capacity addition and strengthening the dealer network in rural Telangana and Andhra Pradesh.

Market Share & Ranking

Established market position in South India with a 3 MTPA capacity; however, it faces intense competition from larger pan-India players and regional manufacturers in the surplus-prone South Indian market.

Strategic Alliances

Maintains a Joint Venture (JV) with NCL Buildtek Ltd (NCL Buildtek & NCL Industries JV), although it currently has no major business activities.

🌍 External Factors

Industry Trends

The cement industry is currently seeing a trend of consolidation and capacity additions by major players. While demand is growing, sporadic capacity additions lead to unfavorable price cycles and supply-demand mismatches in Southern India.

Competitive Landscape

Intense competition from numerous regional players in Andhra Pradesh and Telangana, leading to pricing pressure and limited product differentiation.

Competitive Moat

The moat is built on cost leadership through captive limestone mines and 25% captive power, alongside strong brand recall for 'Nagarjuna Cement'. This is sustainable as long as captive reserves last and utilization remains above 90%.

Macro Economic Sensitivity

Highly sensitive to infrastructure spending and housing demand in South India. A 1% change in regional GDP growth typically correlates with cement demand shifts.

Consumer Behavior

Shift toward branded cement and ready-to-install building materials like Bison Panels and NCL Doors for faster construction cycles.

Geopolitical Risks

Global coal and petcoke price volatility driven by geopolitical tensions impacts power and fuel costs, which are major components of the cost of goods sold.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by mining leases for limestone and environmental clearances for cement production and hydel power units. Compliance with BIS standards for cement quality is mandatory.

Environmental Compliance

Subject to strict pollution control board norms for cement plants; costs involve maintaining dust emission levels and waste heat recovery systems.

Taxation Policy Impact

Effective tax rate is approximately 25-30% based on reported PAT of INR 93 crore on healthy operating profits in FY24.

Legal Contingencies

The company faces risks from the crystallization of contingent liabilities, though specific pending court case values are not detailed in the provided credit reports.

⚠️ Risk Analysis

Key Uncertainties

Volatility in cement prices (realizations) and input costs (coal/petcoke) are the primary uncertainties, with the potential to swing operating margins by 3-5%.

Geographic Concentration Risk

High concentration risk with nearly 100% of revenue derived from the South Indian market, making the company vulnerable to regional political or economic shifts.