Shri Keshav

Shri Keshav Cements & Infra Ltd. reported a strong sequential performance in Q3 FY25, with EBITDA surging 88% quarter-on-quarter to ₹7.38 crores, achieving an EBITDA margin of 26.26%. Total income for the quarter increased by 14% QoQ to ₹29.04 crores. However, cement dispatch volumes for Q3 FY25 were 58,960 tons, representing a 14% year-on-year decline from 68,610 tons in Q3 FY24. Net profit stood at ₹0.64 crores, with an EPS of ₹0.36. For the nine months ended December 31, 2024, total income was ₹85.64 crores, and EBITDA was ₹20.17 crores, with a margin of 24.29%.

The company maintains its commitment to renewable energy, meeting 100% of its energy needs through solar power since April 2018, which has led to a 75-80% reduction in power costs. Solar generation improved by 10.4% QoQ in Q3 FY25, partly due to a new 3 MW addition in August 2024. Management emphasized that their overall EBITDA margins are among the highest in the cement industry, largely attributable to their solar initiatives, which significantly offset the lower cement-specific margins (less than ₹50 per ton).

The cement sector experienced challenging conditions in Q1 and Q2 FY25 due to elections and monsoons, resulting in 'very bad realization,' particularly in the Southern market. The naked cement price in Q3 FY25 was ₹3,302, an 8% reduction from ₹3,761 in Q3 FY24, and a 1% QoQ decline. While Q3 saw prices stabilize, Q4 has shown improved volumes. Management anticipates better price discipline and realization to improve by FY26 end, noting that current prices are 'definitely not sustainable' given industry overcapacity and competitive pressures.

Shri Keshav Cements has completed the CAPEX for a new kiln, which is expected to be operational by March 2025, increasing total capacity to 1 million tons per annum. The commissioning was strategically delayed from January to March to avoid disrupting dispatches during a period of high capacity utilization (90-95%). Management projects a 50% utilization rate for the new capacity by FY26 end, anticipating significant improvements in PAT margins and reductions in fuel and power consumption once the new kiln is fully operational.

The company is actively pursuing strategies to enhance market share and capitalize on government-led infrastructure development. Initiatives include hiring top talent, expanding dealer networks, engaging with institutions, and implementing digital marketing. Management aims to achieve cement-specific EBITDA margins comparable to or better than other South-based players, which currently average around ₹422 per ton. They are also considering further solar capacity expansion, with a decision expected by the next quarter, to further strengthen their competitive advantage.