SHREDIGCEM - Sh. Digvijay Cem

📊 NSE: SHREDIGCEM 🏢 Cement - North India 📅 Last Updated: 12/14/2025 13:04

💰 Financial Performance

Revenue Growth by Segment

The company operates in a single segment: Manufacturing and Sales of Cement. Revenue from operations decreased by 8.6% YoY, falling from INR 793.34 Cr in FY2024 to INR 725.19 Cr in FY2025 due to subdued realizations and lower demand.

Geographic Revenue Split

100% of revenue is derived from the Indian market, specifically concentrated in Western India with its primary production facility located in Digvijaygram, Gujarat.

Profitability Margins

Profitability saw a significant decline in FY2025; Net Profit Margin dropped from 11.07% in FY2024 to 3.47% in FY2025. Operating margins for 9M FY2025 weakened to 5.80% from 18.69% in the previous fiscal due to a steep decline in realizations and a INR 17 Cr annual shutdown cost in Q3 FY2025.

EBITDA Margin

EBITDA margin contracted by 1,022 basis points, falling from 19.34% (INR 154.94 Cr) in FY2024 to 9.12% (INR 67.06 Cr) in FY2025, reflecting intense cost pressures and lower sales realizations.

Capital Expenditure

The company is executing a brownfield capex of INR 250.0 Cr to double its cement grinding capacity from 1.5 MTPA to 3.0 MTPA, with commissioning expected in Q4 FY2025.

Credit Rating & Borrowing

Crisil reaffirmed the long-term rating at 'Crisil A' but revised the outlook to 'Negative'. Short-term rating is 'Crisil A1'. The company secured term debt of INR 125.0 Cr for capex, with gross debt rising to INR 109.85 Cr in FY2025 from zero in FY2024.

⚙️ Operational Drivers

Raw Materials

Key raw materials include Clinker, Gypsum, and Fly Ash. Total expenditure on operations was INR 667.93 Cr in FY2025, representing approximately 92% of total revenue.

Import Sources

Primary sourcing is domestic, centered around the manufacturing hub in Gujarat, India, to optimize logistics for the Jamnagar facility.

Key Suppliers

The company entered into an exclusive 10-year usage, supply, and distributorship agreement with Hi-Bond Cement (India) Pvt Ltd (HIBOND) starting in 2025.

Capacity Expansion

Current installed capacity is 1.5 MTPA; expanding to 3.0 MTPA through a brownfield project at the Digvijaygram facility, scheduled for completion by Q4 FY2025.

Raw Material Costs

Raw material and operating costs as a percentage of revenue increased significantly as total expenditure rose to INR 667.93 Cr against a revenue of INR 725.19 Cr, driven by volatility in input prices and the inability to pass costs to consumers.

Manufacturing Efficiency

Capacity utilization is a key monitorable; clinker production was 10.05 Lakh MT and cement production was 13.87 Lakh MT in FY2025.

Logistics & Distribution

Logistics operations are managed to enhance market reach; the company utilizes its coastal location in Jamnagar for efficient distribution in Western India.

📈 Strategic Growth

Expected Growth Rate

100%

Growth Strategy

Growth will be achieved by doubling grinding capacity to 3.0 MTPA, an exclusive 10-year distribution agreement with Hi-Bond Cement, and a strategic ownership shift as India Resurgence Fund (IRF) acquires a 50.10% stake to provide capital and strategic oversight.

Products & Services

The company sells cement bags (primarily Portland Pozzolana Cement) and Clinker to construction and infrastructure customers.

Brand Portfolio

Shree Digvijay Cement, Kamal Cement, and Hi-Bond (via exclusive distribution agreement).

New Products/Services

Launch of innovative and superior quality niche products is planned to enhance market reach, though specific revenue contribution percentages for new launches are not yet disclosed.

Market Expansion

Expansion is focused on deepening the distribution network in Western India and leveraging the Hi-Bond brand for broader market penetration starting FY2026.

Market Share & Ranking

The company maintains an established market position in Western India with a 1.5 MTPA capacity, set to grow to 3.0 MTPA.

Strategic Alliances

Exclusive 10-year usage and supply agreement with Hi-Bond Cement (India) Pvt Ltd, including an option to acquire 100% equity of HIBOND.

🌍 External Factors

Industry Trends

The industry is moving toward consolidation and sustainability; SDCCL is positioning itself by doubling capacity and targeting 65% green power to counter the 8.6% revenue decline seen in the current sluggish market.

Competitive Landscape

Faces intense competition from large pan-India players and regional manufacturers in the Gujarat and Western India markets.

Competitive Moat

Moat is based on its coastal location in Jamnagar providing logistics advantages and a long-standing brand presence since 1944; sustainability is reinforced by the IRF acquisition and Hi-Bond alliance.

Macro Economic Sensitivity

Highly sensitive to infrastructure spending and GDP growth; cyclical downturns in the cement industry result in slow offtake and constrained operating rates.

Consumer Behavior

Shift toward branded, high-quality cement for individual home builders and infrastructure projects.

Geopolitical Risks

Global demand-supply conditions and fluctuations in international fuel prices (coal/petcoke) impact the cost of production.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to evolving environmental norms and pollution control standards; the company maintains an adequate system of internal controls tested for compliance with the 2013 Act.

Environmental Compliance

The company follows 'Clean and Green is Profitable' philosophy, subscribing to voluntary emissions reduction programs and investing in Waste Heat Recovery Systems.

Taxation Policy Impact

Tax expenses for FY2025 were INR 9.34 Cr, representing an effective tax rate of approximately 27% on Profit Before Tax of INR 34.54 Cr.

Legal Contingencies

The Regional Director partially allowed an appeal, dropping a penalty under Section 90(4A), but upheld penalties of INR 2,00,000 each on several individuals (including Ermirio Pereira de Moraes and others) for failure to submit BEN-1 forms under Section 90(10).