Shree Cement Limited

Shree Cement reported a strong Q2 FY26 with total cement sales volume, including Shree Cement East Private Limited, growing 6.8% year-on-year. Realization per ton increased from INR4,451 to INR4,840, driven by a higher share of premium products (21% vs 15% last year). Consequently, EBITDA surged 46% YoY to INR851 crores, with EBITDA per ton rising 43% to INR1,105. However, on a sequential basis, volumes were down 12% and EBITDA decreased 31% due to heavy monsoon rains in North India.

The company continued its 'value over volume' strategy, prioritizing realization and brand equity, which led to a 9% year-on-year realization growth. The share of premium products in total sales increased significantly from 15% last year to 21% in Q2 FY26, contributing to improved realizations. Management aims to maintain this premium product share in the coming quarters^⏳ and believes this strategy will enable growth either in line with or slightly better than the industry.

Shree Cement commissioned a 3.65 million tons clinkerisation unit at Jaitaran, Rajasthan, and expects a 3 million tons cement mill there soon. The integrated project of 3 million tons at Kodla, Karnataka, is in its final stages and expected to be commissioned this quarter. The company also expanded its green energy footprint by commissioning a 20 MW solar power plant in Chitrakoot and India's first RMC solar plant at Jaipur, bringing total green power capacity to 612 MW and achieving a 63% green electricity share in H1 FY26.

The UAE operations delivered their best-ever quarterly performance, with sales volume growing 34% YoY from 9.87 lakh tons to 13.1 lakh tons. Sales revenue increased 50% YoY, and EBITDA saw a substantial 158% YoY growth, reaching AED52.53 million. Given this robust performance and strong demand, the company announced plans to add a new 3 million tons mill and debottleneck its kiln by 0.5 million tons in UAE, fully funded by local cash.

The company is actively working on logistics optimization, particularly by increasing its rail share in outbound logistics from the current 11% to a target of 20%, expecting savings of INR100 per ton. Projects like commissioning the Purulia railway siding and starting work on sidings at Kodla and Etah are underway. Additionally, the use of Alternate Fuel Resources (AFR) increased to 2.3% from 1.5% last year, with further increases expected as more facilities are created.

Management noted that it is too early to project demand post-monsoon and festival seasons, citing potential labor shortages. While the GST rate reduction from 28% to 18% is seen as a long-term positive for cement demand, its short-term impact is yet to fully materialize. Prices in October were observed to be slightly lower across India due to festivals and less robust demand, though the company maintained stable prices from Q1 to Q2. Management emphasized that price prediction is challenging due to market forces.