Analyst Concall
Shree Cement identifying options to meet 2028 capacity goal
This story was originally published at 20:41 IST on 14 May 2025
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--Shree Cement: Demand rebounded in Jan-Mar driven by govt capex
--Shree Cement: Sales rose on rise in residential demand from rural sector
--Shree Cement: Continuing efforts to enhance share in green power
--Shree Cement: Expect cement demand to grow by 6.5-7.5% in FY26
--Shree Cement: Trying for better brand equity to push for better pricing
--Shree Cement: Etah plant to cater to high demand mkts in central, east UP
--Shree Cement: Vibrant demand in North, East; South picked up in last 2 mos
--Shree Cement: Need to wait for 1 more qtr to comment on price realisation
--Shree Cement: Have sufficient limestone to service all existing capacities
--Shree Cement: See clinker capacity at 44 mln tn by end of FY26
--CONTEXT: Shree Cement clinker capacity was 38 mln tn at end of FY25
--Shree Cement: Expect cement prices to hold, not crash in FY26
By Pallavi Singhal and Anjana Antony
NEW DELHI/MUMBAI – Shree Cement Ltd. is working to identify suitable options to meet its cement capacity target of 80 million tonnes by 2028, the company's management told analysts in a post-earnings analyst call. The company currently aims to expand its cement production capacity to 72.4 million tonnes as part of its next phase of expansion, according to a regulatory filing by the company. The company has also earmarked a capital expenditure outlay of INR 30 billion for ongoing projects in 2025-26 (Apr-Mar).
The company had recently commissioned a new grinding unit each at Etah in Uttar Pradesh and at Baloda Bazar in Chhattisgarh, with capacities of 3 million tonnes and 3.4 million tonnes, respectively. These additions have taken Shree Cement's total installed capacity to 62.8 million tonnes in India, the management said.
The cement company expects demand to grow by 6.5-7.5% in 2025-26 (Apr-Mar), fuelled by rising infrastructure projects, rural recovery, as well as real estate momentum. The reporting quarter witnessed a rebound in demand, driven by factors such as an increase in government capital expenditure and an overall pickup in all economic activities, the management said. A pickup in the residential sector demand in rural areas propelled by good monsoons and increased urbanisation also boosted the demand.
The company reported its highest sales volumes in a decade, the management said, led by an improvement in price variation through enhanced focused on the sales of its premium products, raising the level of brand positioning versus competitors, and a superior geo mix. "We are confident the strategy will play out in improving brand equity, lifting volumes, as well as price relations (in the coming year as well)," it said.
The company will continue on its path of focusing on raising profits, instead of volume. It expects profits to rise on the back of a rise in demand, especially from the southern states. "Demand has been vibrant in the East and North India. We have seen them rise in South, too, in the past two months. We expect this trend to continue," the management said. While capacity utilisation of the entire cement sector may currently be low, at around 65%, the company sees it growing to 75-80% in the next 2-3 years.
Shree Cement's new grinding unit in Etah, Uttar Pradesh, strategically positions the company to tap into the high-demand markets of central and eastern Uttar Pradesh. The company plans to leverage this advantage to increase its market share in the said parts of the state. On expansion of its plants in other northern states, the management said that there is ample opportunity to enter markets in states like Jammu and Kashmir, Gujarat, and western Madhya Pradesh, where there is still room for growth. "We will continue that effort," the management said. The company has earmarked a capex outlay of 3 billion for ongoing projects in FY26.
The company's management said that it had sufficient limestone reserves to service all their existing capacities as well as new expansions coming up. It is also looking to expand its clinker capacity to 44 million tonne, from the current capacity of around 38 million tonnes. The company management showed confidence in growth prospects of the sector, stating that prices of cement are likely to hold and not crash in the ongoing financial year.
Shares of Shree Cement closed 1.6% higher at INR 30,620 on the National Stock Exchange. The stock had come off highs briefly after the company released the results during market hours. End
Edited by Deepshikha Bhardwaj
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