SHREECEM - Shree Cements Ltd. Share Price

In the recent earnings call, management provided an optimistic outlook for Shree Cement. They anticipate cement demand growth of approximately 6.5% to 7.5% for FY '26, driven by government infrastructure projects, recovery in rural demand, and a resurgence in the real estate sector. The company reported strong operational results for the quarter, with total sales volume increasing to 9.84 million tons, a 13% growth from the previous quarter. Average realization improved by about 5% to INR 4,768, while EBITDA surged 47% to INR 1,383 crores.

Management highlighted strategic moves, including a focus on premium products, which increased their sales share from 11.9% in Q4 FY '24 to 15.6% in Q4 FY '25. They also mentioned a continued commitment to sustainability, achieving a green electricity share of 60.2% and ramping up green power generation capacity to 582 megawatts"”a 21% increase.

On the expansion front, Shree Cement has commissioned new capacities, including a cement grinding unit of 3 million tons in Etah, Uttar Pradesh, and a 3.4 million tons unit in Baloda Bazar, Chhattisgarh. Management confirmed ongoing projects to enhance total capacity to 68.8 million tons by FY '26. Additionally, they expressed confidence in achieving over 80 million tons capacity by 2028 and improving market share in Central and East Uttar Pradesh through strategic positioning.

Management also provided insights into their conservative approach to accounting, including a provisioning adjustment of INR 24 crores due to legal notices. For FY '26, the total capex earmarked is around INR 3,000 crores as part of their growth strategy. Overall, the management's forward-looking stance is characterized by a focus on profitability over volume, a commitment to sustainability, and strategic market expansions.

1. Question: "What is the outlook now for volume for FY '26, particularly as we are commissioning large capacities in Q1?"

   Answer: "Our strategy is not to be the biggest volume player in the industry but the most profitable one. Therefore, we expect volume growth of around 6.5% to 7.5% for FY '26. I would be slightly more aggressive and suggest we may achieve about 39 million tons in FY '26, but our focus remains on profitability over sheer volume."

2. Question: "What is the thought process going forward in terms of expansion?"

   Answer: "We have announced several locations for expansion and we are prepared to launch these projects at the right time. This includes ongoing projects scheduled for FY '26, with a total capex of about INR 3,000 crores earmarked."

3. Question: "What are the numbers for fuel cost per kCal and trade mix?"

   Answer: "The fuel cost per kCal for this quarter stands at INR 1.48, down from INR 1.82 in March '24. The lead distance is 446 km, and our trade share remains steady at 73%."

4. Question: "Could you give us the current clinker capacity and total limestone reserves?"

   Answer: "Our current clinker capacity is 36.7 million tons, and we expect it to rise to 44 million tons by FY '25-'26. While we won't disclose the exact figures for limestone reserves, we assure that our reserves can support our existing and forthcoming expansions adequately."