Nuvoco Vistas May Face Cost Pressures in H1FY27 Amid Rising Petcoke, Packaging Costs

Nuvoco Vistas Corp Ltd Expects Cost Escalations in Cement Manufacturing Process

Nuvoco Vistas Corp Ltd, a cement maker owned by the Nirma Group, is anticipating cost escalations in the cement manufacturing process for the first half of the ongoing financial year. These escalations are largely attributed to the impact of the Iran-Israel conflict and its spillover into the Gulf region, which has led to increased fuel prices and disrupted supply lines.

The conflict has pushed up fuel prices, affecting the cost of petcoke, a key fuel feedstock for the industry. Additionally, the supply of polypropylene (PP) granules for bags, used as a packaging material for cement, has been hit due to higher fuel prices and rationing of crude oil and gas supplies. According to managing director Jayakumar Krishnasawamy, the prices of PP granules have increased to Rs 155 per kilogram from Rs 99 in a matter of weeks, with the overall cost impact expected to be in the range of Rs 70-80 per tonne due to inflation in bag prices.

| Comparison of PP Granule Prices | | --- | --- | | Original Price | Rs 99 per kilogram | | Current Price | Rs 155 per kilogram | | Cost Impact | Rs 70-80 per tonne |

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The government has mandated PP granule makers to prioritize supplies to bag manufacturers to make packaging material for food and fertilizers, with cement being low on the priority list. Jayakumar added that prices of PP granules increased significantly, with the overall cost impact expected to be in the range of Rs 70-80 per tonne due to inflation in bag prices.

Another impact, Jayakumar added, came from price increases and disruptions on gypsum supply. Oman is a large supplier to various Indian cement makers. Even as Nuvoco has petcoke stocks to meet demand for at least a quarter, Jayakumar said that the firm may see an increase in prices, if there is a resumption in hostilities between the US and Iran, especially in the July-September quarter.

Over the same period, PP granule prices are expected to drop, as well as that of gypsum. Jayakumar added that some increase in petcoke prices are expected in the July-September quarter as orders being booked at the current elevated prices are expected to be delivered then.

Cement prices have been increasing, with nearly all cement makers hiking prices in the first week of April. Nuvoco, which has significant market share in the eastern, northern, and central parts of India, followed the rest of the industry. Jayakumar said that with costs increasing across the board, the company announced another price hike in the past week.

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| Cement Price Hike | | --- | --- | | Original Price Hike | Rs 10-Rs 15 across the board | | Nuvoco's Additional Price Hike | Rs 10 last week | | Total Price Hike | Rs 20-Rs 25 across the board |

Starting April 1, there was a price increase of Rs 10-Rs 15 across the board in the market. Nuvoco hiked prices by an additional Rs 10 last week. For Nuvoco, the price increase in the entire market is about Rs 20-Rs 25, with Jayakumar looking at a 3-5 percent hike this year.

On April 14, the company declared its financial results for FY26, with volumes increasing by 5 percent to 20.4 million tonne. Its profit increased to Rs 360 crore, compared to Rs 22 crore in FY25, with revenue growing by 10 percent year-on-year (YoY) to Rs 11,362 crore. Earnings before interest, tax, depreciation, and amortization (EBITDA) grew by 35 percent to Rs 1,881 crore in the reported period.

While the company has room to increase production at its existing facilities, it is looking to grow in western India through the acquisition of Vadraj Cement, a Gujarat-based cement maker, under the Insolvency and Bankruptcy Code (IBC) process. The Vadraj capacity, as well as brownfield expansion capacities at existing plants, can take the company's cement manufacturing facilities to over 35 MTPA by the end of the decade.

Nuvoco is spending around Rs 1,800 crore in capital expenditure over the current and next financial years, Jayakumar stated, with much of the spending to get the Vadraj facilities back into the market, a process that is expected to be phased in from the third quarter of the ongoing financial year.

Despite the promise of growth in southern India on the back of infrastructure spending, Jayakumar said that Nuvoco is not entering the market, citing competitive intensity. The company has a project in Gulbarga (Kalaburagi), but Jayakumar stated that it plans to service the Vidarbha and Marathwada markets of Maharashtra from that plant.