How has been the historical performance of Sagar Cements?

Revenue and Profitability Trends

Over the seven-year period ending March 2025, Sagar Cements’ net sales demonstrated a general upward trend, rising from approximately ₹1,217 crores in 2019 to a peak of ₹2,504 crores in 2024 before easing to ₹2,258 crores in 2025. This growth reflects the company’s expanding operations and market presence. However, profitability has been inconsistent. Operating profit margins (excluding other income) peaked at 29.2% in 2021 but declined sharply thereafter, falling to 6.25% in 2025. The gross profit margin also contracted significantly, turning negative in the latest fiscal year, signalling cost pressures and margin erosion.

Profit after tax (PAT) mirrored this volatility, with a high of ₹186 crores in 2021 followed by a steep decline into losses of ₹210 crores in 2025. Earnings per share (EPS) followed suit, swinging from a positive ₹79.16 in 2021 to a negative ₹16.05 in 2025. These figures underscore the challenges faced by the company in maintaining profitability amid rising costs and interest expenses.

Cost Structure and Expenses

The company’s cost base has expanded in line with its revenue growth. Raw material costs increased from ₹199 crores in 2019 to ₹424 crores in 2025, while power costs surged from ₹363 crores to nearly ₹797 crores over the same period. Employee costs and manufacturing expenses also rose steadily, reflecting operational scaling. Despite these increases, total expenditure excluding depreciation remained below total operating income, though the narrowing gap contributed to margin compression.

Balance Sheet and Financial Position

Sagar Cements’ total assets grew substantially from ₹1,918 crores in 2020 to over ₹4,022 crores in 2025, driven by investments in gross block assets and capital work in progress. Shareholders’ funds expanded from ₹967 crores in 2020 to ₹1,723 crores in 2025, supported by reserves accumulation. However, the company’s debt levels also rose sharply, with total debt increasing from ₹428 crores in 2020 to ₹1,430 crores in 2025, reflecting higher long-term and short-term borrowings. This elevated leverage has contributed to rising interest expenses, which nearly tripled from ₹63 crores in 2019 to ₹188 crores in 2025.

Cash Flow and Liquidity

Cash flow from operating activities showed resilience, increasing from ₹202 crores in 2020 to ₹233 crores in 2025, despite fluctuations in working capital. Investing activities reflected significant outflows in recent years, particularly in 2022, consistent with capital expenditure growth. Financing activities have been a net outflow since 2022, indicating debt repayments or reduced borrowings. The company’s cash and bank balances declined from ₹262 crores in 2024 to ₹164 crores in 2025, signalling tighter liquidity.

Summary and Outlook

In summary, Sagar Cements has demonstrated robust revenue growth and asset expansion over the past several years, reflecting its strategic investments and market development. Nonetheless, the company has faced significant challenges in sustaining profitability, with recent years marked by losses and margin contraction. Rising debt and interest costs have further pressured earnings, while cash flow from operations remains positive but under strain. Investors should weigh these factors carefully, considering both the company’s growth potential and financial risks as they evaluate its future prospects.

Limited Time Only! Subscribe for Rs. 12,999 and get 1 Year of MojoOne + an Additional Year Completely FREE. Don't miss out on this exclusive offer. Claim Your Free Year →