Detailed Narrative
Q2 & H1 FY26 Financial Performance Overview
Shri Keshav Cements & Infra Ltd. delivered robust financial results for Q2 and H1 FY26. In Q2 FY26, total income reached INR 36.22 crores, marking a 42.81% year-on-year increase. EBITDA surged by 175% to INR 8.38 crores, with the EBITDA margin expanding to 23.65% from 12.44% in Q2 FY25. The company reported a PAT of INR 0.69 crores and an EPS of INR 0.39, signifying a turnaround from a prior-year loss. For the first half of FY26, total income grew 37.14% to INR 77.62 crores, and EBITDA increased by 69% to INR 18.7 crores, achieving a healthy margin of 24.68%.
Operational Efficiency & Cost Management
The company's operations are fully backed by renewable energy, providing a strong cost advantage. Electricity costs are among the lowest in the country due to 100% renewable power. Significant progress has been made in fuel consumption reduction, with current levels at 850-900 kilo calories, aiming to reach below 800 kilo calories within the next couple of months. The new pre-heater equipment and kiln stabilization are expected to further enhance heat efficiency and contribute to becoming one of the most efficient plants by the end of the current quarter.
Market Penetration & Dealer Network
Shri Keshav Cements serves North Karnataka, coastal Karnataka, Goa, and parts of Maharashtra through 350 distributors and over 600 retail touch points. The company is focusing on strengthening market penetration and improving reach, expanding volumes, and optimizing supply chain efficiencies. Initiatives include digital marketing, a new loyalty program for retailers, and ensuring quick delivery within 12 hours to maintain dealer fidelity. Despite a slow market in Q2 due to monsoons and labor unavailability, the company increased its cement division sales by 64%.
Pricing Environment and Outlook
The cement pricing environment has been challenging, with naked cement prices remaining relatively flat at INR 3,460 in Q2 FY26, only slightly up from INR 3,430 in Q1 FY26. This is significantly lower than FY23/FY24 levels of INR 4,100, resulting in a loss of approximately INR 600 in EBITDA per ton compared to those periods. Management expects prices and construction activity to improve by the end of November, which is crucial for achieving H2 FY26 EBITDA targets of INR 45-50 crores (or INR 350-450 per ton for cement only).
Capacity Utilization and Future Growth
Current capacity utilization stands at 35-36%, with management aiming to reach 50-60% or even 80% without much difficulty given the significant market area covered. The new kiln has stabilized and is contributing consistently. For FY27, at 70% utilization, the company targets a total EBITDA of INR 70-80 crores, including solar power benefits. The company is also exploring non-trade customers and has received approvals from various departments to develop these areas.
RMC Business and Capital Allocation
Plans for a Ready-Mix Concrete (RMC) plant, initially considered for a Q3 pilot, have been postponed to Q4 FY26 or Q1 FY27, awaiting cement price stabilization. The RMC setup is not capital-intensive, and all regulatory clearances are in place. No immediate CAPEX plans have been finalized for solar or other projects. The company intends to use cash accruals from improved capacity utilization to reduce debt. Management expressed openness to a potential buy-out if it aligns with shareholder interests and fair valuation.