SHREECEM - Shree Cements Ltd. Share Price

In the earnings call held on February 6, 2026, Shree Cement Limited's management provided an optimistic outlook focused on value over volume to improve profitability. Mr. Ashok Bhandari, the Senior Advisor, highlighted that the strategy of restraining volumes has helped narrow the price gap from INR 30 to INR 15 per bag when compared to competitors like UltraTech. Shree Cement achieved sales of about 2.7 million tons in November, 3.3 million tons in December, and expected volumes in January to be consistent with December.

Management expressed confidence in achieving a total annual cement production of 37 to 38 million tons, noting that they anticipate selling between 9 million to 9.5 million tons in the current quarter. They expect robust demand due to government spending before the end of the fiscal year, with projections indicating a growth rate in line with the national GDP forecast of 7.4% for FY26-27. The company aims to maintain this momentum and is working towards a capacity of 80 million tons by FY29, contingent upon favorable demand conditions.

Regarding financials, the company reported RMC revenues of INR 71 crores for the quarter, with a projected addition of 26 to 30 more RMC plants bringing the total to 45 plants within the next 6-8 months. The capital expenditure (capex) for FY26 is expected to be around INR 500 crores, and they have already reported INR 1,500 crores spent so far.

Key forward-looking points from management include:

• Targeting a total cement capacity of 80 million tons by FY29.
• Continued focus on narrowing the pricing gap with competitors.
• Anticipation of strong demand driven by government budget allocation.
• Ongoing expansion of RMC plants to enhance geographical reach and cement consumption.
• Capex of INR 500 crores planned for FY26.

1. Question: "Given you are prioritizing absolute earnings, your volumes have lagged the overall industry to some extent. Now, in fact, your operating rates would be more like mid-50 utilizations. How should we think about your capacity expansion plans and target of 80 million tons from the next 2 years' perspective?"

   Answer: Since October '24, we've focused on value over volume. This strategy narrowed our price gap from INR30 to INR15 per bag, albeit at the cost of some volumes. December saw growth, with sales of 3.3 million tons, and we expect this momentum to continue. Our goal of 80 million tons by FY'29 is still in view, but we will update on that in due course.

2. Question: "Is it fair to say that you would continue to focus on reducing this further? What would be the absolute revenues of the RMC business and how much cement would your RMC use internally?"

   Answer: Yes, we will keep increasing profits. Currently, we have 19 RMC plants and plan to expand to 45 within 6-8 months. For the quarter, RMC revenues were INR71 crores, with 45% of cement used being captive consumption for RMC.

3. Question: "What would be the comparable sales volume in the December quarter?"

   Answer: Our sales volume in the December quarter was 8.7 million tons, which reflects an increase from 7.9 million tons in the September quarter.

4. Question: "What would be the capex for next year at this point in time?"

   Answer: We expect to spend about INR500 crores in FY '26, mainly on adding RMC plants, with plans for 26 to 30 plants.

5. Question: "What is the trend in power and fuel costs?"

   Answer: Our power and fuel costs are favorable. Currently, our per kilocalorie cost is at 1.56, primarily due to increased renewable energy usage, which reached 61%. This trend should continue unless there is an unexpected spike in coal or pet coke prices.

6. Question: "What should we expect for the volumes for this financial year?"

   Answer: We expect around 9 to 9.5 million tons for the quarter, with a projected annual growth rate of around 7.5% to 8%, dependent on demand.

7. Question: "What are the blended cement share and lead distance for this quarter?"

   Answer: The lead distance for the quarter was 446 kilometers, and trade sales comprised 65% of our volume. Blended cement also accounted for 65%.

8. Question: "Can you share insights on your UAE performance?"

   Answer: The UAE operations are improving consistently, but I don't have specific volume or revenue details available right now. We'll share those details as they become available.

9. Question: "What is the expected depreciation cost for next year?"

   Answer: Depreciation for next fiscal is anticipated to be about INR1,600 crores, give or take. It may vary slightly, but that's the expectation.

10. Question: "Can we expect a material upside in the dividend outlay going ahead?"

Answer: Yes, I expect the dividend payout for FY "˜25-"˜26 to be better than FY "˜24-"˜25, though the exact figures will be determined by the board.

Each response has been provided succinctly, respecting the character constraints while maintaining essential details and figures.