Anjani Portland Cement Q3 FY26: Losses Deepen Amid Severe Volume Decline

The third quarter results underscore mounting operational challenges for Anjani Portland, with the company's operating margin (excluding other income) turning negative at -1.79%, a sharp reversal from the 7.96% achieved in Q2 FY26. Year-on-year comparisons paint an equally grim picture, with net sales declining 23.93% from ₹105.31 crores in Q3 FY25, whilst consolidated net losses improved marginally by 4.82% from ₹20.56 crores a year ago. The company's financial trend has been classified as "Negative" by proprietary analysis, reflecting deteriorating fundamentals across multiple quarters.

Financial Performance: A Quarter of Severe Contraction

The December 2025 quarter witnessed a dramatic collapse in Anjani Portland's top-line performance, with net sales of ₹80.11 crores representing the lowest quarterly revenue recorded in the available dataset. The 28.17% sequential decline from September 2025's ₹111.53 crores reflects severe volume pressures in an already challenging cement market. On a year-on-year basis, revenues contracted 23.93%, indicating sustained demand weakness rather than seasonal fluctuations.

The profitability metrics deteriorated sharply during Q3 FY26. Operating profit before depreciation, interest, tax, and other income (PBDIT excluding OI) turned deeply negative at ₹-1.43 crores, compared to a positive ₹8.88 crores in the previous quarter. The operating margin (excluding other income) collapsed to -1.79% from 7.96%, indicating the company is now operating below breakeven at the EBITDA level. This represents a concerning reversal from the brief improvement witnessed in Q2 FY26.

At the bottom line, consolidated net losses ballooned to ₹19.57 crores in Q3 FY26, translating to a PAT margin of -24.50%—the worst quarterly performance in recent history. The sequential deterioration of 297.76% from Q2 FY26's loss of ₹4.92 crores reflects both operational deleverage from lower volumes and persistent fixed cost pressures. Interest expenses remained elevated at ₹8.78 crores, whilst depreciation charges of ₹10.66 crores further weighed on profitability. The company's tax credit of ₹1.07 crores provided minimal relief in an otherwise dismal quarter.

Operational Challenges: Structural Weakness Exposed

The dramatic revenue decline in Q3 FY26 exposes fundamental operational vulnerabilities at Anjani Portland Cement. With an installed capacity of approximately 1 million tonnes per annum at its Suryapeta District facility in Telangana, the company appears to be facing severe capacity utilisation challenges. The 28.17% quarter-on-quarter sales decline suggests volumes have fallen precipitously, likely reflecting both weak regional demand and intensifying competitive pressures in the South Indian cement market.

The company's balance sheet reveals mounting financial stress. As of March 2025, Anjani Portland carried long-term debt of ₹422.45 crores against shareholder funds of just ₹213.73 crores, resulting in a debt-to-equity ratio of 2.26 times—amongst the highest in the cement sector. This elevated leverage constrains financial flexibility and results in annual interest expenses of approximately ₹33.00 crores, creating a significant fixed cost burden that becomes particularly punishing during volume downturns.

Return on capital employed (ROCE) stands at a deeply negative -3.85% for the latest period, with a five-year average of -1.21%, indicating sustained value destruction. Return on equity (ROE) of 1.77% on average basis (and -20.39% for the latest period) ranks amongst the weakest in the cement sector, reflecting both operational inefficiencies and the burden of high leverage. These metrics underscore the company's inability to generate adequate returns on the capital invested in its business.

The company's working capital position has deteriorated, with current assets of ₹109.63 crores as of March 2025 barely exceeding current liabilities of ₹224.23 crores, resulting in negative working capital. Trade payables have increased to ₹68.21 crores, suggesting potential supplier payment pressures. The cash flow statement for FY25 shows operating cash flow of just ₹9.00 crores, insufficient to service debt obligations or fund necessary capital expenditure.

Industry Context: Cement Sector Headwinds Intensify

The Indian cement industry has faced significant headwinds over the past year, with demand growth moderating and raw material cost pressures persisting. Regional players like Anjani Portland, operating single-plant facilities with limited scale advantages, have been particularly vulnerable to these industry-wide challenges. The company's 23.93% year-on-year revenue decline in Q3 FY26 significantly exceeds typical industry contraction rates, suggesting company-specific execution issues beyond broader sectoral weakness.

Anjani Portland's operational footprint in Telangana places it in a market characterised by intense competition from larger players with superior cost structures and distribution networks. The company's inability to maintain pricing power or volume growth in this environment reflects fundamental competitive disadvantages. Over the past five years, the company has witnessed a sales decline of 15.62% on a compound annual basis, whilst operating profits (EBIT) have contracted at a staggering 211.39% CAGR—indicating sustained operational deterioration.

Peer Comparison: Lagging Industry Benchmarks

A comparative analysis against cement sector peers highlights Anjani Portland's significant underperformance across key financial metrics. The company's return on equity of 1.77% (average basis) trails substantially behind peers, whilst its elevated debt-to-equity ratio of 2.25 times reflects one of the most leveraged balance sheets in the sector. The company's price-to-book ratio of 1.99 times, whilst below some high-growth peers, appears unjustified given the negative ROE and deteriorating fundamentals.

Amongst its peer group, Anjani Portland ranks sixth by market capitalisation at ₹417.00 crores, reflecting its status as a micro-cap player in a sector increasingly dominated by large, integrated manufacturers. The company's ROE of 1.77% compares unfavourably to BIGBLOC Construction's 23.93% and Visaka Industries' 6.95%, highlighting significant operational efficiency gaps. Whilst Anjani Portland's debt-to-equity ratio of 2.25 times is lower than Shiva Cement's extreme 39.12 times, it remains elevated compared to better-capitalised peers like Visaka Industries (0.52 times).

Valuation Analysis: Risk Outweighs Opportunity

Anjani Portland Cement's valuation metrics present a mixed picture that ultimately tilts towards caution. The stock trades at a price-to-book value of 1.99 times, representing a premium to book value despite the company's negative ROE and deteriorating financial performance. This valuation appears difficult to justify given the fundamental challenges facing the business. The company's valuation grade has been classified as "Risky" since May 2023, reflecting concerns about its ability to generate sustainable returns.

Traditional earnings-based valuation metrics remain inapplicable due to the company's loss-making status. The P/E ratio cannot be calculated, whilst the EV/EBITDA multiple of 70.96 times appears extraordinarily elevated—a reflection of the company's minimal EBITDA generation relative to its enterprise value. The EV/Sales ratio of 1.76 times suggests the market is pricing in some recovery potential, though this appears optimistic given current operational trends.

The stock's 52-week range of ₹96.00 to ₹161.00 reflects significant volatility, with the current price of ₹139.45 positioned 13.39% below the 52-week high and 45.26% above the 52-week low. This volatility, combined with the company's high beta of 1.50, indicates elevated risk for investors. The stock has delivered negative returns across most timeframes, underperforming both the Sensex and the cement sector by substantial margins.

Shareholding Pattern: Stable but Low Institutional Interest

Anjani Portland's shareholding structure has remained remarkably stable over recent quarters, with promoter holding steady at 75.00% across the past five quarters. Chettinad Cement Corporation Private Limited holds the entire promoter stake, with no pledging of shares—a positive indicator amidst otherwise challenging fundamentals. The absence of promoter pledging suggests confidence in the long-term prospects, though this must be weighed against the operational realities.

Institutional participation remains minimal, with total institutional holdings at just 0.11%. Foreign institutional investors (FIIs) have reduced their already negligible stake from 0.04% in March 2025 to 0.00% in December 2025, signalling a complete exit. Mutual fund holdings have remained stable at 0.09%, represented by a single fund, whilst insurance companies maintain no exposure. This near-absence of institutional interest reflects concerns about the company's financial health and limited liquidity in the stock.

The non-institutional shareholding of 24.89% comprises primarily retail investors, with minimal change over recent quarters. The lack of institutional accumulation despite the stock's decline suggests professional investors remain unconvinced about near-term recovery prospects. Daily trading volumes remain thin, with just 495 shares traded on February 12, 2026, indicating limited market interest and potential liquidity challenges for larger investors seeking to exit positions.

Stock Performance: Sustained Underperformance Across Timeframes

Anjani Portland Cement's stock performance over the past year has been characterised by consistent underperformance against both broader market indices and sector benchmarks. The stock has declined 7.19% over the past 12 months, whilst the Sensex advanced 9.85%—resulting in negative alpha of 17.04 percentage points. Against the cement sector's 10.16% gain over the same period, Anjani Portland underperformed by 17.35 percentage points, highlighting company-specific weakness beyond industry trends.

The longer-term picture is even more concerning. Over three years, the stock has declined 23.13% whilst the Sensex gained 37.89%, resulting in negative alpha of 61.02 percentage points. The two-year underperformance stands at 53.89 percentage points, reflecting sustained investor pessimism about the company's turnaround prospects. Only over the 10-year period has the stock delivered positive absolute returns of 45.99%, though this dramatically lags the Sensex's 264.02% gain over the same timeframe.

Recent price action shows some near-term strength, with the stock gaining 14.87% over the past three months and 6.17% year-to-date. However, this appears to represent technical bounces rather than fundamental improvement, as the Q3 FY26 results have confirmed continued operational deterioration. The stock's high volatility of 57.96% and negative risk-adjusted return of -0.12 over the past year place it in the "high risk, low return" category—an unfavourable combination for investors.

Investment Thesis: Multiple Red Flags Warrant Caution

The investment case for Anjani Portland Cement is undermined by multiple fundamental weaknesses that have persisted and intensified over recent quarters. The company's proprietary Mojo score of 24 out of 100 places it firmly in "Strong Sell" territory, reflecting poor performance across valuation, quality, financial trend, and technical parameters. The quality grade of "Below Average" indicates sustained underperformance in long-term financial metrics, whilst the "Negative" financial trend classification highlights deteriorating near-term fundamentals.

The company's five-year track record reveals sustained value destruction, with sales declining at a 15.62% CAGR and EBIT contracting at an alarming 211.39% CAGR. Average ROCE of -1.21% and ROE of 1.77% indicate the business has consistently failed to generate adequate returns on invested capital. The debt-to-EBITDA ratio of 14.93 times and EBIT-to-interest coverage of -0.02 times highlight severe financial stress that constrains operational flexibility and raises refinancing concerns.

Key Strengths & Risk Factors

Outlook: Critical Monitoring Points

The outlook for Anjani Portland Cement remains challenging, with limited near-term catalysts for improvement visible in the current operating environment. The company faces the dual challenge of restoring volume growth whilst simultaneously addressing its overleveraged balance sheet. Management's ability to navigate these challenges will determine whether the business can return to sustainable profitability or faces continued deterioration.