SHREECEM - Shree Cement

📊 NSE: SHREECEM 🏢 Cement - North India 📅 Last Updated: 12/14/2025 13:15

💰 Financial Performance

Revenue Growth by Segment

Consolidated operating income moderated by around 6% YoY to INR 19,283 Cr in fiscal 2025, primarily due to industry-wide subdued cement realisations. Total volume growth (cement plus clinker) was reported at 4.6%-4.7% for the recent quarter, with cement-only volume growing at 6.8%. Ready Mix Concrete (RMC) business is being scaled with new plants planned for FY26.

Geographic Revenue Split

The company maintains a strong market position in Northern India (core market) with an increasing presence in Eastern and Southern regions. It also operates in the UAE through its subsidiary Union Cement Company PJSC, which is currently undergoing a AED 110 million expansion to serve the Middle East market.

Profitability Margins

EBITDA per tonne moderated to INR 986 in fiscal 2025 from INR 1,155 in fiscal 2024 (a 14.6% decline). However, the company achieved a 9% Net Sales Realisation (NSR) growth in Q2 FY26, outperforming the industry average of 5%-7%. Operating margins are expected to improve to over INR 1,050 per tonne from fiscal 2026 onwards.

EBITDA Margin

Consolidated EBITDA per tonne stood at INR 986 in FY25. The company targets an improvement to INR 1,300-1,400 per tonne in the long term, driven by a focus on premium products and internal efficiency measures such as increased green power usage and logistics optimization.

Capital Expenditure

Planned capital expenditure of INR 10,000-12,000 Cr is scheduled for fiscals 2026-2028 to reach a capacity of 80 MTPA. Additionally, a capex of approximately AED 110 million (fully funded by local cash) is allocated for UAE operations expansion.

Credit Rating & Borrowing

Maintains 'CRISIL AAA/Stable/CRISIL A1+' and 'CARE AAA; Stable / CARE A1+' ratings. The company operates with a highly deleveraged balance sheet, with a gearing ratio of 0.04 times as of March 31, 2025, and total debt of only INR 817 Cr.

⚙️ Operational Drivers

Raw Materials

Key raw materials include clinker, slag (for special products), and multiple fuel types for power generation. Specific cost percentages for each material were not disclosed, but input cost volatility is cited as a primary risk factor.

Import Sources

Sourced domestically across India and locally within the UAE for Middle East operations. Specific state-level or country-level import splits are not disclosed.

Capacity Expansion

Current installed domestic cement capacity is 62.8 MTPA as of April 2025, following the commissioning of units in Etah (UP) and Baloda Bazar (Chhattisgarh). The company has a roadmap to reach 80 MTPA by FY28.

Raw Material Costs

Susceptible to volatility in input costs. The company mitigates this through internal efficiency measures and the ability to operate plants with multiple fuel types to optimize costs based on market tariffs.

Manufacturing Efficiency

Efficiency is driven by high capacity utilization (projected volume of 37-38 million tons for the current year) and the use of waste heat recovery systems and green energy.

Logistics & Distribution

Distribution costs are being optimized through the expansion of railway sidings and the assumption of a new role by the Chief Logistics Officer to streamline the supply chain.

📈 Strategic Growth

Expected Growth Rate

4.70%

Growth Strategy

Growth will be achieved by expanding capacity from 62.8 MTPA to 80 MTPA by FY28, increasing the share of premium products (which grew 9% in price recently), and scaling the RMC business with a new 'playbook' of plants by FY26. The company is also expanding in the UAE to capture slag and oil well cement markets.

Products & Services

Cement bags (base and premium), Clinker, Ready Mix Concrete (RMC), Slag cement, and Oil Well cement.

Brand Portfolio

Shree Cement, and various unnamed 'Premium Products' positioned at higher price points than base brands.

New Products/Services

Expansion into special products like slag and oil well cement in the Middle East and the rollout of a standardized RMC plant playbook by FY26.

Market Expansion

Targeting increased presence in Southern and Eastern India, alongside a AED 110 million capacity expansion in the UAE market.

Market Share & Ranking

Established market leader in Northern India; currently diversifying to maintain and grow capacity share against large competitor announcements.

🌍 External Factors

Industry Trends

The industry is seeing a trend toward consolidation and massive capacity announcements. Shree Cement is positioning itself by accelerating its 80 MTPA roadmap and focusing on premiumization and green energy to maintain a superior EBITDA per tonne.

Competitive Landscape

Facing significant capacity expansion announcements from competitors, particularly in the core Northern India market.

Competitive Moat

Moat is built on cost leadership (cost-efficient operations), a strong brand in North India, and a robust financial profile (Net Cash). Sustainability is supported by a high share of green power and internal cash-funded expansions.

Macro Economic Sensitivity

Highly sensitive to cyclicality in the cement industry and infrastructure spending. Realizations are sensitive to industry-wide demand-supply dynamics.

Consumer Behavior

Increasing demand for premium, higher-priced cement products and specialized solutions like RMC and oil well cement.

Geopolitical Risks

Exposure to Middle East markets through UAE operations; however, management remains positive on UAE and Middle East demand for special products.

⚖️ Regulatory & Governance

Industry Regulations

Subject to environmental and pollution norms for cement manufacturing. Compliance is managed through investments in green energy and internal efficiency measures.

Environmental Compliance

Strong focus on ESG; commitment to green energy and internal efficiency. NSE Sustainability Ratings & Analytics Ltd recently provided an ESG rating for the company.

Taxation Policy Impact

The company received a demand notice of INR 588.65 Cr in May 2025 following IT department surveys in fiscal 2024. The company is expected to take legal remedial action.

Legal Contingencies

Pending demand of INR 588.65 Cr from the Income Tax department. Management is pursuing legal remedies against this notice.

⚠️ Risk Analysis

Key Uncertainties

Volatility in cement realizations and input costs (fuel/power) are the primary uncertainties. A sustained decline in operating profitability or debt-funded acquisitions exceeding 1.0x Net Debt/EBITDA are key downward rating factors.