Shree Cement Ltd continues to prioritize value over volumes. While peers chase market share, the company’s premiumization strategy is helping it score better on key financial and operational metrics.
A rising share of premium products and price hikes in eastern India drove realizations higher both year-on-year and sequentially in the June quarter (Q1FY26). Shree Cement saw a sequential rise in realizations of ₹203 per tonne to ₹5,528 per tonne in Q1FY26—the highest among large-cap peers UltraTech Cement ( ₹157 per tonne) and Ambuja Cements ( ₹115 per tonne), according to a 4 August report by Elara Securities (India).
Premium products accounted for 17.7% of Shree’s trade sales in Q1FY26, up from 15.6% in the previous quarter. There is headroom for growth here, as UltraTech and Ambuja derive over 30% of trade sales from premium offerings.
Despite a sequential decline in Ebitda per tonne to ₹1,373 from a multi-quarter high in Q4FY25, Shree Cement remained an industry leader on this metric. Energy efficiency also improved, with green electricity accounting for 65.6% of total power consumption in Q1FY26, up from around 60% in Q4FY25. In contrast, UltraTech’s green power mix stands at around 40%, and Ambuja’s at 28%, a gap that should help Shree keep energy costs in check.
But in a crucial side-effect, Shree Cement lost market share for the fourth consecutive quarter in Q1FY26. At 8.95 million tonnes, cement sales volume fell around 7% year-on-year and 9% sequentially, missing analysts’ expectations. The fall in the company’s volume compares with mid-single digit year-on-year growth for the cement industry in Q1FY26.
Apart from the value over volume strategy, sales were impacted by other factors such as high base and subdued demand. Its key northern India market, accounting for roughly half of overall volumes, witnessed border tensions and heavy rains in May and June. Meanwhile, a rise in freight costs further weighed on margins. Ebitda for the quarter fell sequentially to ₹1,229 crore, but rose 34% year-on-year, supported by improved pricing.
Shree Cement added 6.4 million tonnes per annum (mtpa) of grinding capacity in April and is on track to add another 6mtpa in the coming quarters, taking total India capacity to 68.8mtpa by FY26. It has maintained its target of reaching 80mtpa by FY28, with planned capex of ₹4,000 crore annually from FY25 to FY28.
Operations at its subsidiary in the United Arab Emirates, Union Cement Co. (UCC), have improved over the past two years. UCC recently announced a capex of AED 110 million (around ₹260 crore) for a 3 mtpa brownfield grinding capacity expansion.
“We believe that the company’s strategy, along with sizable domestic expansion plans, is unsustainable,” said the Kotak Institutional Equities report dated 5 August. On a standalone basis, Kotak estimates Ebitda per tonne of Rs1,283 and 1,346 in FY26 and FY27, respectively.
Also, while Shree Cement is expanding, focus onpricing and premiumization might well mean that despite higher capacity additions, lower volumes could keep utilisations tepid.
“We estimate that a lower capacity utilisation (about 60-62% over FY26-28) will lead to lower return ratios (return on equity/ return on capital employed at about 9%/10%, post-tax, versus in mid-teens over FY16-24,” said Motilal Oswal Financial Services. Utilisation stood at around 57% in Q1FY26.
Shree Cement shares have gained 18% in 2025 so far, outperforming peers UltraTech, ACC Ltd, and Ambuja. At its FY27 estimated EV/Ebitda multiple of around 18x, it trades on par with UltraTech, but at a premium to ACC and Ambuja.
While realisation growth remains a key differentiator for Shree Cement, the near-term outlook is tempered by seasonal weakness in Q2 and a subdued pricing environment.
