Detailed Narrative
Strong Q4 FY26 Performance and FY26 Overview
Shree Cement reported a robust Q4 FY26, with domestic cement sales volume increasing by 24.5% QoQ to 10.56 million tons and total volume (cement + clinker) growing 9.45% QoQ to 10.77 million tons. Operating EBITDA saw a significant 34.36% QoQ increase, reaching INR 1,212 crores, with EBITDA per ton improving to INR 1,125. For the full year FY26, total sales volume grew 2.2% to 36.4 million tons, and operating EBITDA (excluding one-time📎 impact) increased 11% to INR 4,222 crores, with EBITDA per ton at INR 1,161.
Capacity Expansion and Project Updates
The company commissioned an integrated project of 3.65 million tons clinker and 3.5 million tons cement capacity at Kodla, Karnataka, increasing its installed cement production capacity in India to 69.3 million tons. Further expansion includes a 2.5 million tons cement mill in Union Cement, UAE, scheduled for commissioning by September '26, and a new integrated plant in Meghalaya with 0.95 million tons clinker and 0.99 million tons cement capacity. The total capex for FY27 is estimated at INR 1,500 crores, primarily for RMC plants, railway sidings, and the Meghalaya project.
Union Cement (UAE) Performance and Middle East Impact
Union Cement in UAE demonstrated strong performance, with FY26 sales volume up 18% to 45.65 lakh tons and revenue growing 39% to AED 870 million. Q4 FY26 also saw healthy growth, with volume up 9% QoQ to 11.65 lakh tons and revenue up 18% QoQ to AED 247 million. However, sales have slowed in the last two months due to geopolitical tensions in the Middle East, though a recovery is anticipated with a ceasefire.
Cost Management and Fuel Price Dynamics
The company's landed cost per kilocalorie was INR 1.60 in Q4 FY26, but it is expected to increase by 10-12% in Q1 FY27, reaching INR 1.76-1.80. Packing costs are also projected to rise by INR 100 per ton going forward⏳. Management noted that while coal is becoming cheaper than pet coke, pet coke prices have also cooled. The company maintains over 90 days of fuel inventory, and costs are charged on a weighted average basis, leading to a gradual impact of rising prices.
Capital Allocation and Shareholder Returns
Shree Cement maintains a strong financial position with INR 6,400 crores in net cash and INR 1,500 crores in gross borrowings as of March '26. The company's strategy is to fund all capex through internal accruals. For FY26, the Board recommended a final dividend of INR 70 per share, bringing the total annual dividend to INR 150 per share, a 36% increase over FY25's INR 110 per share.
RMC Business Expansion and Outlook
The Ready-Mix Concrete (RMC) business is rapidly expanding, with 26 operational plants at the end of FY26 and 10 new plants inaugurated in March '26, bringing the total to 36 plants by the start of FY27. For Q4 FY26, RMC revenue was INR 90 crores with a volume of 1.99 lakh MQ, and full-year FY26 revenue stood at INR 246 crores. Management views RMC as a nascent business that will take several quarters to years to report independently.
Sustainability Initiatives and Green Power
The company continues its focus on sustainability, with green electricity accounting for 61% of total electricity consumption in Q4 FY26, up from 59% in Q4 FY25. Its green power generation capacity stands at 666.5 megawatts. Shree Cement also achieved a water positivity index of more than 8x in FY26 and maintains zero liquid discharge across all manufacturing locations.
Market Outlook and Pricing Strategy
Management expects India's GDP growth to be 6.5% in FY27, translating to a cement demand growth of 7.1-7.2%, with the company targeting 8-8.5% growth. After achieving a stable pricing platform and narrowing the gap with top players by INR 15-20 per bag, the company is now focused on gaining fair market share while maintaining profitability. Price hikes of approximately INR 25 per bag were implemented recently.