Nuvoco Vistas Corporation Limited delivered exceptional third-quarter performance for FY26, achieving record volumes and significant EBITDA growth despite challenging market conditions. The cement manufacturer reported its highest-ever Q3 volumes while maintaining strong operational efficiency and cost management.

Record Volume Performance and Market Recovery

The company achieved remarkable volume growth during the quarter ended December 31, 2025, with cement sales reaching 5.00 million tons, marking a 7% year-on-year increase. This represents the highest Q3 volumes in the company's history, demonstrating strong execution capabilities despite early-quarter macro headwinds.

December emerged as a particularly strong month, with volume growth of 20% year-on-year, indicating robust underlying demand recovery. The quarter began on a challenging note but showed encouraging signs of recovery as macro headwinds began to subside, particularly in the latter part of the quarter.

Strong Financial Performance Despite Pricing Pressures

Despite pricing moderation following revised GST rates and macro headwinds, the company delivered impressive financial results. EBITDA for the quarter rose approximately 50% year-on-year to ₹386.00 crores, reflecting the company's focus on premiumization and operational efficiency.

The company's emphasis on premiumization yielded significant results, with premium products sustaining their share at 44% of trade volumes for consecutive quarters. For the nine months of FY26, premiumization stood at 43%, reflecting a steady uplift of nearly 300 basis points over the FY25 baseline of 40%.

Operational Excellence and Cost Management

Nuvoco demonstrated exceptional cost management capabilities, achieving the lowest blended fuel cost in 17 quarters at ₹1.41 per million calories, despite recent upticks in petcoke prices. The company's fuel mix optimization strategy proved effective:

The company successfully reduced petcoke consumption from 48% to 41% year-on-year while increasing domestic coal usage and alternative fuel adoption. Raw material cost per ton and distribution cost per ton also declined quarter-on-quarter, supported by operational efficiency gains.

Strategic Expansion and Balance Sheet Management

During the quarter, Nuvoco raised ₹600.00 crores through Compulsorily Convertible Debenture (CCD) issuances, which were utilized to replace equivalent short-term bridge financing, thereby reducing overall debt levels. The company expects to complete an additional ₹600.00 crores CCD issuance in the near term to substitute remaining short-term bridge financing.

The Vadraj Cement Plant refurbishment remains on schedule, with operationalization of clinker and grinding units planned in phases from Q3 FY27 to Q1 FY28. Key equipment overhaul is progressing at both Kutch and Surat locations, with engineering, tendering, and ordering of all packages now complete.

Digital Innovation and Market Positioning

The company continued strengthening its digital infrastructure, with the customer portal now handling approximately 99% of total orders. Following success in cement operations, Nuvoco launched a customer portal for its MBM business and introduced the Nuvoco ZeroM Unnati app to digitize influencer loyalty programs.

Looking ahead, the company remains optimistic about demand recovery, supported by accelerating government capital expenditure and improving rural consumer confidence. With approximately 45% of central CAPEX and 61% of state CAPEX remaining pending as of November 2025, the healthy project pipeline provides comfort for continued demand growth.

Source: Nuvoco Vistas Corporation Limited Q3FY26 Earnings Conference Call Transcript

Nuvoco Vistas Corporation has received a maintained Hold rating from ICICI Securities, though the brokerage has revised its target price downward to ₹369 from the previous ₹400. The recommendation comes following the company's Q3FY26 performance analysis and updated market outlook.

Q3FY26 Financial Performance

The company's Q3FY26 results showed mixed signals with EBITDA growth offset by pricing pressures. Key performance metrics include:

Despite the realisation falling more than anticipated, Nuvoco's efficient cost management helped the company navigate the challenging pricing environment. The variable cost per tonne decreased by 3% quarter-on-quarter, compared to ICICI Securities' estimate of it remaining flat.

Revised Earnings Estimates

ICICI Securities has adjusted its earnings projections for the company, reflecting current market dynamics and competitive landscape:

The downward revision incorporates three key factors: heightened competitive intensity witnessed during Q3FY26, the potential impact of substantial capacity additions totaling approximately 185 million tonnes per annum over FY26-28, and alignment with the company's 9MFY26 performance trends.

Market Outlook and Seasonal Expectations

The brokerage remains cautiously optimistic about near-term price recovery prospects. With the onset of the busy construction season from January to May each year, ICICI Securities expects potential price improvements in line with Nuvoco's earnings call commentary. However, this optimism is tempered by broader industry challenges and competitive pressures.

Valuation and Investment Rationale

ICICI Securities continues to face constraints in raising its valuation multiple due to persistent debt concerns. The firm maintains its valuation approach:

The maintained Hold rating reflects a balanced view of the company's operational efficiency against industry headwinds. While Nuvoco demonstrated effective cost management during a challenging quarter, the broader competitive landscape and upcoming capacity additions present ongoing challenges for sustained margin expansion.