SHREECEM - Shree Cements Ltd. Share Price

In the recent earnings call held on October 28, 2025, Shree Cement Limited provided a positive outlook for the future, highlighting several key points of interest:

1. Performance Metrics: For the second quarter (Q2) of FY '26, total cement sales volume increased by approximately 6.8% year-over-year (YoY), rising from 7.6 million tons in September '24 to 7.9 million tons in September '25. The realization per ton improved significantly from INR 4,451 to INR 4,840, lifted by a higher share of premium products (from 15% to 21%).

2. EBITDA Growth: Total EBITDA surged by 46%, reaching INR 851 crores, while EBITDA per ton (adjusted for a one-time impact) grew by 43% from INR 772 to INR 1,105. However, there was a sequential decline due to monsoon impacts affecting volumes, with a 12% drop in volumes quarter-over-quarter.

3. Expansion Plans: The management is optimistic about ongoing expansion efforts, including the commissioning of a clinkerization unit of 3.65 million tons in Jaitaran and a 3 million ton cement mill expected soon. An integrated project in Kodla, Karnataka is also nearing completion.

4. GST Impact: The reduction of GST from 28% to 18% is viewed as transformational, expected to enhance long-term cement demand. The company fully passed on this benefit to customers.

5. Sustainability Efforts: Shree Cement has ramped up its green energy initiatives, with 63% of total electricity consumption now from renewable sources. The company has also commissioned India's first RMC solar plant in Jaipur.

6. Market Conditions and Strategy: The Indian economy is showing resilience with strong consumption and investment activity. Management expects the demand for cement to grow in line or slightly better than industry growth, driven by the GST cut and accelerating infrastructure development.

7. Future Capacity Utilization: The company aims for a robust capacity growth trajectory, with plans for incremental expansions beyond the current projects, maintaining a focus on quality over sheer volume.

Overall, Shree Cement's management exhibits confidence in the company's strategy and market positioning, foreseeing a period of steady demand growth bolstered by favorable government policies and strategic initiatives in sustainability and premium product offerings.

Here are the major questions and their detailed responses from the earnings transcript:

1. Question: On cement realization, you mentioned it was INR 4,840 per ton. Could this exclude other operating income? Could you give a similar number for Q1 as well? Answer: Yes, INR 4,840 excludes other operating income. Unfortunately, due to a previous SAP system glitch, we don't have a comparable Q1 number. However, we did see a decline Q-on-Q but a YoY increase, as Mr. Akhoury pointed out.

2. Question: What would be the outlook on the expanded capacity? Can we expect a slow ramp-up? Answer: There are no barriers in the cement market, so our strategy prioritizes value over volume. We will likely grow at or slightly above the industry rate, ensuring we maintain our value positioning while gradually increasing capacity.

3. Question: Is there any other one-off in other operating expenses? Answer: Currently, there's no other one-off in the results. The increased expenses are due to repair and maintenance costs. Otherwise, these are standard operational costs without any extraordinary items affecting them.

4. Question: How should one expect demand over the next couple of quarters? Are we seeing any green shoots from the GST cut? Answer: It's early to project demand. We're coming out of festival periods, and there may be labor shortages impacting construction. The GST cut is expected to stimulate longer-term demand, but we need to observe how this plays out in the short to medium term.

5. Question: Should we expect a similar focus on premiumization in the new capacity? Answer: Our premium cement sales increased from 15% to 21%. We will continue this strategy of promoting premium products in our new capacity expansions while maintaining a broader appeal.

6. Question: What will be our capex numbers for FY '26 and FY '27? Answer: For FY '26-"˜27, we estimate a capex of INR 3,000 crores. For FY '27-"˜28, we plan similar levels, potentially spilling into FY '28-"˜29 based on our commissioning strategy and market conditions.

7. Question: Among the core markets, how is pricing currently compared to Q2 averages? Answer: Today's prices are slightly lower than peak prices because we've passed on GST benefits to consumers. Overall pricing is stable but maybe down slightly due to decreased demand post-festival season.

8. Question: How much savings are expected from increasing rail share in logistics? Answer: We expect our rail share in logistics to reach about 20% in the near future, yielding around INR 100 savings per ton compared to road transport costs.

9. Question: How many new RMC plants are you targeting in the coming years? Answer: We currently have 24 operational RMC plants and aim to reach up to 40 by FY '26. We are expanding quickly and also evaluating profit levers in this sector.

10. Question: Can we look at the company on a consolidated level rather than separately for UAE? Answer: Absolutely. With our UAE operations performing well, it makes sense to evaluate Shree Cement based on consolidated results, reflecting a more accurate picture of our performance.

These responses offer insights into Shree Cement's operational strategies, market conditions, and future outlook as discussed during the Q&A session of the conference call.