Sagar Cements Limited (NSE: SAGCEM) Q2 2025 Earnings Call dated Oct. 24, 2024
Corporate Participants:
S. Sreekanth Reddy — Joint Managing Director, Promoter Group
Analysts:
Niteen Dharmawat — Analyst
Shravan Shah — Analyst
Analyst
Ritesh Shah — Analyst
Rajesh Ravi — Analyst
Parth Bhavsar — Analyst
Presentation:
Operator
Good day, everyone, and a warm welcome to Sagar Cements Q2 and H1 FY ’25 Analyst and Investor Conference Call. We have with us today on the call, Mr. Sreekanth Reddy, the Joint Managing Director; Mr. K. Prasad, Chief Financial Officer; Mr. Rajesh Singh, Chief Marketing Officer; and Mr. Raja Reddy, Company Secretary. Before we begin, we will begin this conference call with opening remarks from the management, following which we will have the floor open for an interactive Q&A session.
Before we begin, I would like to point out that some statements made in today’s discussions may be forward-looking in nature, and a note to this effect was stated in the con call invite sent to you earlier. We trust you have had a chance to go through the results and the communication documents.
I would now like to hand over to Sreekanth for his opening remarks. Over to you, Sreekanth.
S. Sreekanth Reddy — Joint Managing Director, Promoter Group
Thank you, Gavin. Good morning, everyone, and welcome to Sagar Cements earnings call for the second quarter and first half year ending September 30, 2024. Let me begin the discussion with a brief overview of the market in terms of demand and pricing, post which I will move on to Sagar-specific developments. Overall, Q2 was a soft quarter for the industry at large. Demand decelerated on the back of extended monsoons and sluggish project executions.
Volume offtake on the back of it remained restrained during the quarter. Pricing environment remained competitive across the regions. While the near-term outlook remains challenging, we believe structurally the trend remains positive from medium- to long-term point of view on back of robust housing and infrastructure initiatives coupled with technological advancements and persistent focus on green energy.
Let me now move on to our quarterly performance. As indicated in our previous calls, Q2 performance has been muted amidst demand and pricing challenges. Our overall volumes for the quarter stood at 1.16 million tonnes. Lower volumes and utilization has more than negated the benefits of steady input prices. For the full year, we believe our overall volumes to be in the range of around 5.75 million tonnes.
Moving to the headline numbers; our revenue for the quarter stood at INR475 crores as against INR587 crores during Q2 FY ’24, lower by 19%. EBITDA for the quarter stood at INR20 crores as against INR60 crores generated during Q2 FY ’24. Margins for the quarter stood at 4% as against 10% in Q2 FY ’24. The EBITDA per ton stood at INR172 as against INR459 in Q2 FY ’24. Despite existing challenges related to demand and pricing, we are steadfast in our commitment to long-term objectives of cost reduction and operational enhancements.
Anticipated improvements in the business margin profile and profitability in the coming years are expected to stem from enhanced energy mix, increased reliance on renewables and improved efficiencies and utilization rates across our facilities. Loss after tax stood at INR57 crores for the quarter as against a loss of INR11 crore generated during Q2 FY ’24. Power and fuel cost stood at INR1,446 per ton as against INR1,626 per ton reported during Q2 FY ’24. Freight cost for the quarter stood at INR830 per ton as against INR848 per ton during Q2 FY ’24.
From an operational standpoint of view, Mattampally plant operated at 42% utilization while Gudipadu, Bayyavaram, Jeerabad, Jajpur and Dachepalli plants operated at 83%, 52%, 59%, 20% and 27%, respectively, during the quarter. As far as the key balance sheet items are concerned, the gross debt as on 30th September 2024 stood at INR1,482 crores, out of which INR1,169 crores as long-term debt and the remaining constitutes the working capital. The net worth of the company on a consolidated basis as of 30th September 2024 stood at INR1,921 crores. Long-term debt equity ratio stands at 0.61:1. Cash and bank balances were at INR163 crores as on 30th September 2024.
In summary, we believe our enhanced capacity positions us well capture the growing infrastructure and real estate demand over the coming years. Furthermore, our efforts towards diversifying the revenue streams and increasing our regional footprint should help us in improving the overall profitability profile of the company.
That concludes my opening remarks. We would now be glad to take any questions that you may have. Thank you.
Questions and Answers:
Operator
Thank you Sreekanth. [Operator Instructions] We’ll take the first question from Niteen S Dharmawat. Niteen, please go ahead.
Niteen Dharmawat
Yeah, thank you Gavin and thank you for the opportunity. Am I audible?
Operator
Yeah, you’re audible.
S. Sreekanth Reddy
Yeah, good morning.
Niteen Dharmawat
So a couple of questions. So see as we know that consolidation is happening in the cement industry and the recent one announced by Orient Cement also. So what do you think will be the impact of this consolidation on the industry in general and company in particular?
S. Sreekanth Reddy
Yeah. Mr. Niteen, I think consolidation generally is a good sign for a sector. It could be any sector from pricing power and the number of competitive intensity also gets reduced. That in general is good for the medium to long term. Short term, there could be some impact in terms of when people try to reorganize themselves in terms of brand positioning and consolidation of brands or any of that. Things could always be slightly on sidewards for some time. But on the medium to long term, we believe that it’s going to be beneficial.
Now the market footprint that we are in, I think the impact of consolidation is going to be very, very limited Mr. Niteen, because if you look right from Orissa to North coastal markets of AP and to a certain extent in Madhya Pradesh, the impact of the — so far, the acquisitions, the M&A that have happened or the consolidation that has happened has a very, very limited footprint in those areas. It definitely is going to have some impact in South Andhra and half of Telangana, Karnataka markets and Tamil Nadu markets. So our view is that consolidation is good, but short term, it could have some impact, but it could be marginal one.
Niteen Dharmawat
Got it. Thank you. My next question is so now how is the demand and price trend in our market? And what is the capacity utilization overall that we are running with now?
S. Sreekanth Reddy
Yeah, nothing much has changed from Q2 because we believe that post-Deepavali is likely that the demand offtake is going to improve. Till the demand comes, I think prices more or less remain either on a similar ground or there is some pressure. In some pockets of South, in fact, from exit of September to now also there has been some price correction downward. MP and Orissa, we have seen some price increases, anywhere between INR10 to INR15 for that price improvement we have seen in Eastern market as well as in the Madhya Pradesh market.
But in South, some pockets, we did see some pressure on the price even post-September exit to now. But this month being two months — two-festival month, and at the same time, unfortunately, weather-wise, it looks like it is an extended kind of difficult weather. We see demand improving only from first week of November onwards, not before.
Niteen Dharmawat
Got it. And my final question is about the debt. You mentioned gross debt at INR1,482 crores. What is the net debt that we have? Hello?
S. Sreekanth Reddy
Yeah, we did present, it’s around INR1,293 crores, sir.
Niteen Dharmawat
Got it. Thank you so much and wish you all the best.
Operator
Thank you Niteen. Next, we’ll take a question from Shravan Shah. Shravan, please unmute yourself and go ahead.
Shravan Shah
Hi sir. Sir, just continuing the previous one. So you mentioned that in MP, Odisha, we have seen INR10 to INR15 per bag price hike from exit of September. And for South, if you can specify how much decline we have seen and also, if possible, state-wise?
S. Sreekanth Reddy
Yeah, good morning Shravan. See, I think the price decline in South is across the market, sir. And whatever price increases that was there for some time in September, got eaten away, and on top of it, we actually lost INR10 to INR15 primarily in South Tamil Nadu as well as in Andhra and Telangana. I think it is uniform across the market, Mr. Shravan.
Shravan Shah
So broadly, if I have to understand from the Q2 average, then one can say — is it fair to say kind of a 2% to 3% still the prices are lower?
S. Sreekanth Reddy
See, it is June exit to September exit is INR10 to INR15 [Foreign Speech] correction further, Shravan.
Shravan Shah
Okay. June to September, INR10 to INR15 up or down?
S. Sreekanth Reddy
Down. It is down. Though in between for some time for 2 weeks, there was some price increase, but it got taken away. From September exit to now, that is still — as we speak, it is INR5 to INR10 across the markets in South. See Bangalore, which was doing very well, unfortunately, it got hit in the October month with heavy rains. So that actually put some amount of pressure on the pricing, Mr. Shravan.
Shravan Shah
Okay. And — but do we expect that post-Diwali, once the demand picks up, that’s the hope across the — all the players, they are expecting.
S. Sreekanth Reddy
Shravan, what do you want me to — how do you want me to address. I think our belief is that demand — the lower demand actually put pressure on the price, or else when the price was taken up somewhere around middle of September, it actually got absorbed for some time. But since demand did not — the entire market expected demand to slowly start ramping up, that did not happen. So price immediately — there was a pressure on the price immediately, Mr. Shravan. So our understanding is that at least if not by first week of November, I think by exit of November, we do expect prices to start slowly moving down. May not be in huge quantities, but at least some amount of price upward movement is likely to happen.
Shravan Shah
Okay. Got it. Now coming to — specific to our company. So in terms of if I just do the math, 5.75 million ton volume that for FY ’25 we are looking at. So I hope this is purely the cement sales and not the clinker one?
S. Sreekanth Reddy
No. As always, we have indicated only the cement sales, Mr. Shravan. So that’s the.
Shravan Shah
Yeah. So the ask rate for the second half is kind of 9.5%. So that should be doable or?
S. Sreekanth Reddy
See I think weather supporting we should be very close to that number. I don’t see a major challenge with that because last year itself, we have done close to 5.5.
Shravan Shah
And then broadly, if I have to look at FY ’26, how do we look at for ourselves in terms of the volume?
S. Sreekanth Reddy
I think it is too soon, but I think we should go back to the growth numbers, what we have indicated before. This time, it is long election year, coupled with the weather-wise, it was always a challenge. But I think close to 6.5 to 6.75 should be doable for the coming year, Mr. Shravan.
Shravan Shah
Got it. And this quarter, have you received INR23 crores incentive for MP?
S. Sreekanth Reddy
Yeah, we did. You’re talking of Q2?
Shravan Shah
Yeah, yeah, Q2.
S. Sreekanth Reddy
Sir, we did receive. I think we did inform. We did receive in the month of July itself, we did receive.
Shravan Shah
Okay. Okay. So if I remove that then the price decline for us is 5.7% kind of — for 2Q?
S. Sreekanth Reddy
Yeah, sir. See, I think you are talking of EBITDA. EBITDA is flat to negative if we remove that.
Shravan Shah
Got it. Got it. And now this will be every year, we will be receiving this.
S. Sreekanth Reddy
Yeah, sir.
Shravan Shah
And then will it be in the every second quarter? That’s the way one can look?
S. Sreekanth Reddy
It is due from start of — last year is already due sir. What we received is year before one. So last year is already due. So we should receive some — receipt is subject to government having money. So we are also hopeful that we should receive it sooner because whenever there is an investment meet in the state, they are trying to push this money. So I believe there is one which is happening right now. So likely that we might receive the second one also sooner.
Shravan Shah
Okay. And then on the costing front from now onwards, how much one can look at in terms of cost reduction, at least for third and fourth quarter.
S. Sreekanth Reddy
I think third quarter, we are not expecting anything, Mr. Shravan, but fourth quarter because our fuel procurement, what was it, 105 to 108. Now it is averaging close to 95 to 98. So the benefits of that, which roughly translates to INR75 to INR100 are likely to get in Q4.
Shravan Shah
Okay. Okay. Got it. Got it. And just in terms of the capex, so we have in the 1H done INR6 crores to INR9-odd-crores. Previously, we were looking at INR300-odd-crores for FY ’25. So that number remains intact?
S. Sreekanth Reddy
Yeah. Now let me give you the breakup. At Sagar stand-alone, we indicated it is INR83 crores, out of which we spend INR24 crores during H1. Likely that we might spend only INR10 crores into H2. One of the changes that we have done is we are implementing solar at Gudipadu, which is almost, I think, by end of November, we should commission 6 megawatts solar. That should get added up, but it may not truly reflecting because we went with a lease option. So from what we thought we should infuse from company, we actually switched to the lease option. So that will get implemented. So only INR10 crores would be spent further in Sagar consol in H2.
At Jajpur, what we have indicated at 6 is already spent — sorry, Jeerabad. At Andhra, what we have indicated is 240. Out of that 39 we spent. Likely that we might spend close to around another INR100 crores to INR150 crores for H2, sir. So that is continuing. We are happy that what we have indicated as March ’26 commissioning, we are running a couple of months ahead of schedule as far as Andhra is concerned. From a civil standpoint, out of 10 floors, 5 floors are already completed at Andhra. So the progress on Andhra expansion project is going at a brisk pace, Mr. Shravan.
Shravan Shah
Okay. Okay, great. Thank you and all the best, sir.
S. Sreekanth Reddy
Thank you Mr. Shravan.
Operator
The next question we take from Jyoti Gupta [Phonetic]. Jyoti, if you could unmute yourself please and ask your question.
Analyst
Just wanted to have your — what have you budgeted for third quarter volume growth and EBITDA in fourth quarter? Where do you see the second half going for Sagar Cements?
S. Sreekanth Reddy
Yeah, we are looking at close to 1.75 million to 1.8 million for Q3. And the rest to come from Q4.
Analyst
Okay. And the kind of EBITDA numbers that you have penciled in for the second half, do you see that — the industry?
S. Sreekanth Reddy
Jyoti, at this point of time, I think our strategy is to look at what kind of EBITDA numbers are likely to happen. I think we’ll have a lot more clarity by end of Q3. At this point of time, it’s kind of a flat kind of EBITDA. I think end of this month, when the demand starts getting normalized, we will be in a much better situation to comment on.
Analyst
I believe the demand will start picking up in the second half of November. And the industry is expecting a double-digit growth. Do you see booking at least registering high single digit or you expect something like a double digit? Of course, there will be some?
S. Sreekanth Reddy
Jyoti, I’m sure you’re tracking the market. If you look at Andhra, Telangana, almost down by 30% year-on-year kind of — so even a small surge would make it look very, very high. But we do expect the momentum to be a lot faster because in our business, as you know, the demand doesn’t get vanished. It only gets postponed. So our belief is that most of the weather-wise demand, which was challenging for the last couple of months. With the weather improving, I think all of that should come back and added up with the new investments and the new projects. Yeah, we do expect things to be lot, lot better compared to what went on so far.
Analyst
Any status on Amaravathi, now that we?
S. Sreekanth Reddy
See, I think the best part of Amaravathi is that the financial closure is aggressively happening. I think the Central government loan of INR15,000 crores, followed it up with another HUDCO loan of INR15,000 crores. I think government also is talking to a few other large financiers to pump in some more. All this is extremely good news from a demand perspective. That is one of the reasons why we believe we do expect second half rather — coming 1.5 quarters to be extremely strong.
Analyst
So the international players, which is going to be a financier, any update on that apart from the local?
S. Sreekanth Reddy
I have no idea on that.
Analyst
Okay, sir. Thank you so much, sir. That’s it from my side.
S. Sreekanth Reddy
Thank you.
Operator
Thank you. We take the next question from Amit Murarka [Phonetic]. Amit, if you can unmute yourself.
Analyst
Thank you. Yeah, hi, good morning Sreekanth. So just while you’ve already spoken a lot about the situation on demand and probably the ramp-up of the acquired capacities, but I’m just thinking more from a like medium to longer perspective. So Amaravathi, I think by when you think it should start contributing to demand? And could there be a meaningful pickup in demand once Amaravathi comes in? Just could you provide some sense on that?
S. Sreekanth Reddy
Yeah, Amit, I’m sure, see this is a long — medium to long-term kind of a project. But the best part is I think they are restarting some of the projects which were muted for the last 5 years. So that should take fairly quick time. And at the same time, the neighborhood of Amaravathi, I mean that’s where the bulk of the demand would come, which is for private reason. I think there, the green shoots are already visible.
So we do believe that, that should be a quick start. I think weather-improving, the neighborhood of Guntur and Vijayawada, already, the real estate prices are slowly coming back to what they were. So given that scenario, I think even construction is likely to take good share. Coupled with that, Telangana government as well as Andhra government is talking of low-cost housings.
So that — the good news is they are asking us not to talk about the pending money from the previous regimes. They are talking of something which they want to discuss going forward. So those discussions already we are engaged with them. So these are some of the things we believe should add up to the demand on a medium to long term.
Analyst
In terms of the capacity additions, I think UltraTech’s capacity got added recently. And I think only pending one is the second Deccan clinker line, right?
S. Sreekanth Reddy
I think clinker line is already commissioned. We are waiting for their grinding capacity to be operational anytime soon. I do not have the exact timeline, but our understanding was it should be ready by December is what we have made to understand on that. And actually, the clinker line of My Home was also commissioned. Some portion of grinding also was commissioned, but I think there is one other line which is pending, which is likely before end of this financial year. These are the few projects which got commissioned during the last few quarters.
Analyst
Deccan clinker line is commissioned, is it?
S. Sreekanth Reddy
Yeah, sir. I think it got commissioned a couple of months back, if I am not mistaken.
Analyst
Okay. Okay. So then at least in the next 12 months, no more clinker lines are pending then?
S. Sreekanth Reddy
Yeah. I think except for Line 4 of Tadipatri, UltraTech, nothing is due over the next 12 to 18 months. Of course, Andhra’s expansion is likely to get commissioned by March ’26. But we don’t expect a huge volume jump. It is more from an operational standpoint.
Analyst
Understood. Understood. And I just missed your commentary on debt. What do you think your exit debt will be this year? If you could provide some guidance on that?
S. Sreekanth Reddy
I think our exit debt is going to remain very similar to what it has been, Amit. I think that is what we have narrated that the gross debt position would not be significantly different. But we did present in our quarterly presentation. I think our exit debt likely going to be somewhere around 15%. On a net debt basis, we should be somewhere around close to INR1,300-odd.
Analyst
Okay. Even though you will see pickup in capex in Andhra.
S. Sreekanth Reddy
Yeah, sir, I think our idea is that whatever would have been paid, that is what we would like to borrow. Though we are running slightly ahead of time in terms of the project. So it might slowly blip up — small blip up might happen, but I think our commitment to keep the debt levels very similar remains intact.
Analyst
Sure, sure. That’s all from my side. Thank you.
Operator
Next question we take from, someone going by the name of Iron Man, if you could identify yourself and ask your question, please.
Ritesh Shah
Hi, sir. This is Ritesh from Investec. Sir, couple of questions. Sir, how do you see supply side of the equation in South and in — at India level for say this fiscal and next two fiscals?
S. Sreekanth Reddy
Yeah. South, I think the demand/supply equation probably since the demand actually took a bigger hit, the gap naturally is going to widen up for the current year. But I think going forward, we expect a very similar situation, how it has been for over the last one to one-and-a-half decade, Mr. Ritesh Shah. Those specific numbers, I would be happy to share offline. But I think broadly the demand/supply equation was more skewed towards supply than demand in South historically.
I think the equation demand by/supply probably is going to be very, very similar for two more years in South. Whatever incremental demand, I think matching supply has already come by. So there may not be a significant change in overall kind of demand/supply equation in South. India is too big for us. So yeah, I would rather share the numbers what has been compiled by the team, which I’m sure you are also reasonably well equipped to have those.
Ritesh Shah
Sure, sir. Sir, my second question was how do you see pricing for fly ash and slag for the regions that we operate in?
S. Sreekanth Reddy
See, Ritesh, we have slag supply regions only two of them. One is in Vizag and the other is in Jajpur. Vizag, at this point of time, we have not seen any major changes in the slag prices for last few years. So — and we don’t expect it to be very different. But there are clouds hovering around the RANL [Phonetic] asset itself in Vizag. So given that scenario, they are likely supply for Vizag would change from the current Vizag-centric to somewhere around Jagdalpur kind of area. So the landed cost of slag, we don’t expect major savings to happen. You would be very happy if prices remain where they are.
We slowly started sourcing some amount of slag even from Jagdalpur area from the NMDC blast furnace. The landed cost, more or less, they matched with Vizag. But we have to see if Vizag plant closes down for whatever reason, then we have to see how it will shape up. But the good news in Jajpur area is, we have quite a few blast furnaces that got restarted and few more are getting added up. So with that, we see slag prices slightly going down than where they are. Our average execution cost of slag over last year or so, there has been a drop of almost 10% to 15%. So we are very happy to state that even with the low capacity utilization at Jajpur, we are much, much above the water as far as Jajpur asset is concerned, thanks to the slag pricing itself.
Ritesh Shah
Sir, thanks for the answer. Just a follow-up over here. Have we ever factored imports of fly ash and slag, is it viable or is that just a [Indecipherable]?
S. Sreekanth Reddy
See, I think for the assets that we have, both in Vizag as well as in Jajpur, we keep getting quite a bit of supply offers, but at this point of time, they are almost 25% to 30% at a higher price than what it is. Fly ash is ruled out, Mr. Ritesh. Fly ash, the current supply what we have is very, very compelling. I don’t think import could be an option for us at this point of time.
Ritesh Shah
Sure, sir. Thank you so much and all the very best.
S. Sreekanth Reddy
Thank you Mr. Ritesh.
Operator
Thank you. We take the next question from Raman KV [Phonetic]. Raman, if you could unmute yourself.
Analyst
Hello? Can you hear me?
S. Sreekanth Reddy
Yes, sir. Good morning Mr. Raman.
Analyst
Good morning, sir. I just want to know the guidance for FY ’25 either in terms of revenue growth or volume growth?
S. Sreekanth Reddy
No, I think we did indicate to be around 5.75 million in terms of volume. Revenue, it is still a challenging position for us to take a call on the realization front Mr. Raman.
Analyst
Sir, 5 point?
S. Sreekanth Reddy
5.75 million.
Analyst
Okay. Thank you.
Operator
Thank you. The next question we take is from Rajesh Ravi. Rajesh, please go ahead.
Rajesh Ravi
Hi sir. Good morning. My question — first question is on the incentives. You mentioned INR23 crores was booked in Q2, right? And this is pertaining to before FY ’24?
S. Sreekanth Reddy
Yes, sir.
Rajesh Ravi
Okay. And sir, are we not booking these incentives on accrual basis?
S. Sreekanth Reddy
Yeah, we are booking on it. No, no, on receipt basis only, Mr. Rajesh.
Rajesh Ravi
Okay. And are these INR23 crores number fixed in terms of value or?
S. Sreekanth Reddy
Yeah, I think there is a marginal gap, but I think that number should be around INR21-odd crores for sure. It’s INR150 crores divided by 7. And some amount of electricity and all, which is a variable one, but that should be less than INR1 crores to INR1.5 crores per year, Mr. Rajesh.
Rajesh Ravi
And FY ’24, also you’re expecting to come through.
S. Sreekanth Reddy
Something similar number is expected.
Rajesh Ravi
H2 anytime it can?
S. Sreekanth Reddy
Yeah, sir, it should hit us anytime in H2.
Rajesh Ravi
Okay. And second, sir, if — how are we looking at the scenario? Ex of these incentives, we are at EBITDA loss in Q3, prices are further down from Q2 in your full?
S. Sreekanth Reddy
I think Mr. Rajesh, it’s more an issue of demand. Because in our case, if you look from a cost side, we are doing reasonably well. More an operating kind of — I think we come back to on an average at a group level, 55% to 60% capacity utilization. I think INR400 to INR500 EBITDA per ton is given, Mr. Rajesh.
Rajesh Ravi
Yeah. For that, the pricing needs to improve, but?
S. Sreekanth Reddy
No, I think more than that, our operating leverage itself should help us get to that number, Mr. Rajesh.
Rajesh Ravi
Okay. And if I look at?
S. Sreekanth Reddy
Plus, if you look at salary figure — if you look at wage bill itself, if you kind of improve, that should itself contribute close to INR150 straightaway, Mr. Rajesh.
Rajesh Ravi
Sorry, what will contribute INR150?
S. Sreekanth Reddy
Salaries and wages on an EBITDA per ton number should come down by half — close to that number, just if you increase our group level capacity utilization, 55% to 60%, Mr. Rajesh.
Rajesh Ravi
Okay. And the net debt-to-EBITDA number, now we are north of 6 times. What is the.
S. Sreekanth Reddy
I think that you should look at a more linear number rather than one-off number, Mr. Rajesh.
Rajesh Ravi
No, no. I’m looking at how will this trend lower? What is the [Indecipherable] of the land parcel?
S. Sreekanth Reddy
I think, in a normal year, we should have come down to sub 3. I think this time, it has been a very difficult year. So we expect this year it to come down sub 3 number, Mr. Rajesh.
Rajesh Ravi
Okay. Because FY ’25 seems to be on a slippery slope for everyone. Even UltraTech and all could hardly manage this quarter. If I look at the [Indecipherable] margin, would not be north of INR650. So obviously, everyone is under pressure.
S. Sreekanth Reddy
Mr. Rajesh, if you look at our EBITDA per ton number in Jajpur without doing much also is at INR1,700 thanks to the incentives, Mr. Rajesh. Those are all optical. But I think more a linear number would be sub 3 is the target internally. So we would come down to that number. I think FY ’25 has always been a challenge for us. So I think this should be an exceptional year for us. In a normal course, we should come back to less than 3 kind of a number.
Rajesh Ravi
Okay. And sir, lastly, on the land parcel, this Andhra Cement land sale?
S. Sreekanth Reddy
Yeah, we would wait to give clarity by Q3 results, Mr. Rajesh because the government slowly started working. So we have out of three, one we completed. We have two more steps to cover. So I think we do expect some amount of interface to get increased now. So we’ll have — we’ll be in a much better situation to give update on that by end of Q3.
Rajesh Ravi
Okay. And last question, sir, what would be the total capex target for this year and next year?
S. Sreekanth Reddy
Yeah. I think this year, we should end up — so far, we did close to around INR69 crores, INR70 crores so far in H1. So likely, from what we have indicated at 329, we should end up close to INR200-odd crores, Mr. Rajesh.
Rajesh Ravi
Next year, how much you are targeting, sir?
S. Sreekanth Reddy
Around INR300 crores.
Rajesh Ravi
INR200 crores this year, INR300 next year.
S. Sreekanth Reddy
Yes, sir.
Rajesh Ravi
Great, sir. Thank you. All the best. I’ll come back in queue.
S. Sreekanth Reddy
Thank you.
Operator
Thank you. We take the next question from Kamlesh Jain [Phonetic]. Kamlesh, you can go ahead.
Analyst
Yeah, thanks for the opportunity. Sreekanth, just one question on the part of your capex. Like say, you are — like based on the timelines which have been provided in the presentation, so the waste heat recovery at Dachepalli is expected to come around, like, say, 4 years from now. So why is such a big timeline over there and?
S. Sreekanth Reddy
It’s all to do with the capex, Mr. Kamlesh. So it’s all to do with the capex planning. See, the whole idea is that in Dachepalli — so we would want to stabilize the kiln 2 [Phonetic] because it’s under construction. The preheater is under construction, Mr. Kamlesh. That is likely to complete by March of ’26, though we are running a couple of months ahead of time. So after a year of stabilization only then we would want to start the waste heat recovery on that. And also it is to do with overall kind of cash flow [Indecipherable].
Analyst
Okay, great. Great, that’s only the question.
Operator
The next question we take is from Parth Bhavsar. Parth, will you go ahead?
Parth Bhavsar
Yeah, hi, sir. Thank you for the opportunity. I have a few questions. The first one, sir, I wanted to know like when do we expect Andhra Cement facilities to become efficient at par with our units?
S. Sreekanth Reddy
March ’26, Mr. Parth.
Parth Bhavsar
Okay, March ’26. And sir, what sort of EBITDA — like would it be at par with our facility like EBITDA per ton?
S. Sreekanth Reddy
Yeah, slightly better than Sagar, Mattampally, Mr. Parth because realization is same because it’s the same brand. The cost impact is what — the reason for this upgradation is to save on the overall kind of — overall costing, primarily to improve the efficiency of it. So it should get aligned or become better than Mattampally because it’s a new generation preheater that is being used in Andhra.
Parth Bhavsar
Okay. And sir, like all the cement — they are mentioning that they are looking at cost savings in the range of INR150 to INR200 or INR300 depending to company to company over the next 2 to 3 years. Do we have any such internal target?
S. Sreekanth Reddy
Yeah, Mr. Parth, I think we definitely have a target, sir. I think numbers may not be as high as most of the other people, because fortunately, in our case, most of the assets barring in Andhra’s current this thing, are all upgraded and relatively new. As far as ability to save is not as aggressive. The other saving potential that we are looking at is the investments that we are doing on the renewable side, which again, we have indicated the timeline. Once they get implemented, sir, the spread over a time. So by FY ’27 to FY ’28, likely that we should have a good saving on power and energy.
Parth Bhavsar
Can you like give numbers on this, like cost?
S. Sreekanth Reddy
I think at this point of time, it’s a challenge, Mr. Parth, because we will definitely revert as soon as we compile on those. We would work on that, and we’ll be happy to share as a when it is available.
Parth Bhavsar
Fair enough. And sir, one last question. Sir, given weak cement pricing in Andhra and Telangana and also weak in demand, are there any low-hanging fruits in terms of assets that can get acquired?
S. Sreekanth Reddy
Mr. Parth, I think we don’t know whether there are so many sellers or so many buyers, but the buzz in the market is that everybody is talking to everybody. We don’t know who is selling and who is buying. That is the current situation, Mr. Parth.
Parth Bhavsar
Okay, sir. Thank you so much for answering my questions.
S. Sreekanth Reddy
Thank you.
Operator
Thank you. We have a follow-up question from Raman KV. Raman, do you want to go ahead?
Analyst
No, no, no. Thank you.
Operator
Okay. We have a follow-up then from Shravan Shah. Shravan, do you want to — have a question?
Shravan Shah
Yeah. Sir, just wanted to check in presentation, slide number 16, the 68-kilowatt hours for a metric ton and kcal 714, which was there for Q2 and even Q1 also the similar. But for FY ’25, the same number is decently higher. So from 68?
S. Sreekanth Reddy
No, it’s all to do with the operating leverage, Shravan. It’s because we did not run for most of the time. And this being monsoon season, usually it gets played up.
Shravan Shah
No. So that’s what I’m saying. So once it increases, it should reduce. Why for FY ’25, we are saying it is on the higher side?
S. Sreekanth Reddy
So these are all averages at a consol level, sir. So that’s how it is presented. But I’m sure we should be much lower. But we did do some improvement in Andhra that actually helped us to be slightly better.
Shravan Shah
Okay. And then similar for green share, so Q1 was 14% and now 11.43%. So close to 12%, 13% for 1H, and for FY ’25, we are seeing a 20%, but if I look at in terms of the new capacities that will be coming for solar, is not there. So how this number.
S. Sreekanth Reddy
Mr. Shravan, you should understand that our hydro stations are operational right now, which they were not available for H1. Post-monsoon, our hydro stations start generating, Mr. Shravan. They are available from now all the way up to March, which were also not operational for last year because the reservoirs were empty. But fortunately, this time, I think reservoirs are full and for the next 2 years, the outlook on hydro asset is extremely good for us.
Shravan Shah
Okay. And lastly, sir, lead distance, this quarter 269-kilometer versus 255 in Q1. Is there any specific reason? And is it fair to say once again, it will come back to the 250, 255 level?
S. Sreekanth Reddy
Our target is sub 275. Our target was below 300, Mr. Shravan. We are not going to most parts of South, Tamil Nadu in this point of time because the prices are not viable. I think if you go back to those markets, lead distance probably would move up with the volumes, because at this point of time, our — we withdrew from some of these opportunistic markets, which are not remunerated. So once market slowly improves, there is a possibility that lead distance also will move up. So then our target is to be below 300. So I think I would stick to that number. At this point of time, we have not done much into South Tamil Nadu or far off places because those markets were not as remunerative. So most of those opportunistic orders, we did not fulfill.
Shravan Shah
I got it, sir, but I didn’t understand. So in Q2, despite the volume was lower, the lead distance has increased decently, close to 14-odd kilometers.
S. Sreekanth Reddy
Yeah, we did service, sir. No, it decreased, Shravan. I think you’re reading it slightly lower. It actually got reduced.
Shravan Shah
Okay. Because that’s what?
S. Sreekanth Reddy
It decreased, Shravan.
Shravan Shah
Okay. Okay. My mistake. I got it.
Operator
Thank you. We have the next question from Tom A Kadavil [Phonetic]. Tom, can you go ahead?
Analyst
Yeah. I just want to know about the land monetization. Approximately how many months we will take to get the monetization done?
S. Sreekanth Reddy
Yeah. Mr. Tom, as I mentioned, I think we would be in a much better situation to give a clear update only in Q3 — by end of Q3, Mr. Tom in that regard because the government approvals out of three major approvals, we only received one. Two more are pending. But we’ll have a lot more clarity by end of Q3, Mr. Tom.
Analyst
Okay, okay. That’s it. Thank you.
Operator
Thank you Tom. We have a next question from Shreyans Jain [Phonetic]. Shreyans, you can go ahead.
Analyst
Hi sir. Can you just share the demand outlook for the southern market and the pricing environment for the next, let’s say, H2 and FY ’26, what are you expecting?
S. Sreekanth Reddy
Yeah, Mr. Shreyans, at this point of time, we are not in a situation to talk of outlook for the coming year. We would want to wait for the demand to shape up. But we do have a huge expectation for the coming year because we believe in our business, most of the time when the demand gets muted, especially because of difficult weather, we believe that gets postponed.
So we believe in the last quarter, most of the demand got muted purely because of difficult weather, that is likely to get spread over coming few quarters as well as into the next year. At this point of time, we believe it’s too soon for us to take a call for the coming year. But Q3 — for half of Q3, it has been absolutely very similar to how it has been in Q2 because of the weather. And especially in the current month where the October month has two festivals.
So it is likely going to be very low. But we do expect from November onwards it to pick up. We believe it is going to be at least 15% to 20% higher compared to the first half, for the second half. And most of it is likely to happen starting from November all the way up to March. Next year, we will be happy to comment on that, probably middle of Q4. By then, we would have had a lot more clarity on some of the important projects that are happening in the market that we are in.
Analyst
Thank you so much, sir.
S. Sreekanth Reddy
Thank you.
Operator
Thank you Shreyans. We have no further questions. So I request Sreekanth to conclude with his closing remarks. Sreekanth, can you go ahead, please.
S. Sreekanth Reddy
Yeah. Thank you. We would once again like to thank each of you for joining us on the call. I hope you have got all the answers you were looking for. Please feel free to contact our team at Sagar or CDR should you need any further information or have any further queries, we’ll be more than happy to discuss them with you. Thank you, and have a good day, and happy Deepavali.