KCP Ltd FY26: Cement Bounces Back, Sugar Keeps Its Cool
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1. At a Glance
Cement drove the party this year. Revenue landed at ₹2,576 Cr, up 2% — not thrilling, but the real story lives in the bottom line. Net profit jumped to ₹197 Cr (FY25: ₹147 Cr), a 34% pop on the back of higher realisations and lower input costs in the cement division.
Sugar, the steady cousin, contributed about 40% of revenue. Vietnam operations hummed along with healthy margins despite global sugar oversupply. The engineering unit still hobbles — order book sat at ₹120 Cr as of Sep 2025, meaningful only in relative terms.
Here’s the tension: the company trades at a P/E of 10.4x against a peer median of 28.8x. That gap exists for reasons. Cement is cyclical, southern India is oversupplied, and engineering remains a drag. The cash position is solid — ₹1,167 Cr in equivalents — but growth has been stalled for years. The question isn’t whether the stock is cheap; it’s whether the numbers can keep expanding.
2. Introduction
KCP was founded in 1941 by V. Ramakrishna, starting with sugar. Cement came six decades ago and became the spine. Today it’s a four-legged stool: cement (56% of FY24 revenue, down from 70% in FY22), sugar in Vietnam (40%), heavy engineering, and a hotel in Hyderabad.
The shift from cement-heavy to balanced portfolio happened because cement got nasty. Pricing collapsed in FY25. The CRISIL rating report noted realisations and EBITDA per tonne turned negative in H1 FY25 (Rs -42 per tonne). FY26 reversed that. Realisations recovered, volumes held up, and cost-control measures kicked in.
Management approved a WHRS (waste heat recovery system) at Muktyala and a railway siding — capex moves meant to lower costs and future-proof margins. The sugar side in Vietnam geared up for expansion: 4,000 TPD capacity addition and 75 MW biomass plant, funded internally, due by FY28. These capex plans total ₹750–850 Cr over FY26–28, but the company commits to staying net cash positive.
3. Business Model: WTF Do They Even Do?
Cement dominates by geography. The two plants sit in Macherla and Muktyala in Andhra Pradesh (combined 4.3 MTPA). Another packing terminal at Arakkonam, Tamil Nadu (0.3 MTPA) feeds regional logistics. The company sells OPC, PPC, and rapid-hardening variants — commodities all the way. Southern India is the moat and the trap: huge limestone reserves, mature demand, and so many players fighting for volume that pricing suffers.
Sugar through KCP Vietnam. The subsidiary crushes 11,000 TPD — not tiny. Vietnam has better labour costs and local cane supply, plus it exports. H1 FY26 sugar EBIT margins were 22%, down from 26% in H1 FY25 due to global oversupply driving down prices. But costs are controlled. The margin is healthy even under pressure.
Heavy engineering at Tiruvottiyur, Chennai. Founded 1955. Casting, fabrication, machining for cement, sugar, power, mining. Global customer base scattered across Australia, Malaysia, Vietnam, Indonesia, Korea. The order book was ₹120 Cr in Sep 2025. This division bleeds — it turned EBIT-positive in FY25 for the first time in years, but intensity is low.
A four-star Mercure hotel in Hyderabad under Accor licence. 128 rooms. About 1% of revenue. Decent occupancy post-pandemic, minimal drag.
Power capacity, 34 MW installed, mostly for internal use. Sugar operations in Vietnam will get a new 75 MW biomass plant. The financials of this are lumped into Vietnam operations.
4. Financials Overview
Figures are consolidated, in ₹ crore.
Metric
FY26
FY25
YoY
Revenue
2,576
2,529
1.9%
EBITDA
428
418
2.5%
PAT
197
147
34.0%
EPS
15.3
11.4
34.2%
The quarter-by-quarter story shows cement swinging hard. Q1 FY26 was soft (Q1 always is). By Q4, operating margin rebounded to 17%, the strongest of the year. This tells a cement story: February–March driven by weather and construction push, January haunted by winter slowdown.
Other income lifted to ₹64 Cr (FY25: ₹36 Cr), a jump that came from higher cash balances and likely some interest income from the Vietnam subsidiary. Tax remained a carnival of noise — negative ₹11 Cr in FY26 (adjustments, credits), but the underlying effective rate sits around 4%, low by Indian standards. CRISIL flagged this; the company likely capitalises interest in some circumstances, deferring tax.
Dividend payout stayed miserly. The board recommended 50% of earnings per share as dividend, which on FY26 EPS of ₹15.3 means the yield sits below 0.2%.
5. Valuation Discussion: Fair Value Range (Educational Only)
What follows is a walkthrough of how three valuation methods work, using this company’s numbers as the example — not a target, not a forecast, not advice.
Method 1 (P/E): Annualised FY26 EPS is ₹15.3. The peer band runs from 11.66x (ACC) to 48.58x (Shree Cement). Applying the band: 11.66x × ₹15.3 = ₹178, and 48.58x × ₹15.3 = ₹743. The arithmetic produces ₹178–743 across the peer range.
