As large cement makers chase market share, there are concerns over Shree Cement Ltd’s strategy to prioritise a premium selling price over volume.
In the second quarter (July-September), Shree Cement sold about 7.9 million tonnes (mt) of cement, up 3.9% year-on-year and in line with industry growth. But for the first half of 2025-26 (April-September), its volumes were down 2% year-on-year versus the industry’s estimated growth of 4%.
Even so, the management retained its FY26 sales guidance of 37–38mt, implying a pick-up in the second half of the financial year. That would require stronger post-monsoon construction activity and continued pricing discipline even as new capacity floods the market.
“Over the last few quarters, Shree Cement has lost market share to its peers, which remains a cause of concern,” PL Capital said in a report dated 29 October. To outperform the industry’s volume growth, Shree Cement may need to recalibrate its approach by driving volumes and capitalizing on current pricing stickiness, it added.
Rival UltraTech Cement Ltd’s plan to add 22.8 million tonnes per annum (mtpa) of capacity, most of it in north India, could compound Shree Cement’s challenges given its significant exposure to the same market.
Eyes on expansion
Shree Cement is also pushing the pedal on expansion. It has commissioned a 3.65mtpa clinker unit at Rajasthan, with a 3mpta cement mill expected soon. Another 3mtpa integrated cement manufacturing capacity at Kodla, Karnataka is likely to be commissioned in the third quarter (October-December).
These new facilities will boost Shree Cement’s total manufacturing capacity to 67mtpa by FY26. Thereafter, its capacity is projected to rise to 72–75mtpa by FY27 and 80mtpa by FY29, a year later than planned.
The company’s capital expenditure for FY26 and FY27 remains at Rs3,000 crore each.
Adjusted standalone Ebitda grew 48% year-on-year to Rs875 crore in the second quarter, but fell shy of analysts’ estimates. Ebitda/tonne (adjusted for a one-time impact) rose 42% year-on-year to Rs1,108, but fell 19% sequentially on elevated operating costs and slower dispatches.
Realization/tonne—average selling price per tonne of cement—fell 1.5% from the April-June quarter but rose about 11% year-on-year to Rs5,447, supported by rising share of premium cement for the company.
Higher-value brands, including Bangur Marble Cement, formed about 21% of Shree Cement’s trade sales in the second quarter, versus 15% a year ago, cushioning margins. This mix is expected to stay at 20–21%.
Meanwhile, in 2025 so far, Shree Cement’s share price is up 14%. The stock trades at a premium to peers such as Ambuja Cements Ltd, Dalmia Bharat Ltd, and ACC Ltd—at about 16x Shree Cement’s FY27 enterprise value/ebitda, as per Bloomberg.
