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Informist, Monday, Oct. 20, 2025

By Rajesh Gajra

NEW DELHI - Single-digit volume growth, higher realisation, and lower operating costs will likely drive the earnings performance of Shree Cement Ltd. in the September quarter. The company is expected to post strong bottom-line growth on a year-on-year basis on the back of a surge in operating profit.

The company's sales volume is expected to grow in single digits on year amid moderate cement demand. The sales volume in the year-ago quarter had declined 7% on year. Cement prices were up by a single digit in the reporting quarter. Demand and prices are seen as having helped the company achieve growth in blended realisation in the September quarter.

The cut in the goods and services tax on cement to 18% from 28% is not seen as having any impact on the earnings in the September quarter, as the cut came into effect at the fag end of the quarter. Analysts expect the cement companies to have passed on the benefit of the cut to customers.

Shree Cement is expected to report a 4.2 times rise on year and a 37% fall on quarter in its net profit to INR 3.9 billion in the September quarter, according to the average of estimates from 13 brokerages. The estimates on net profit range from INR 1.8 billion by Nirmal Bang Equities to INR 6.2 billion by YES Securities (India).

The revenue from operations of the company is estimated to increase 17% on year and decline 12% on quarter to INR 43.6 billion in the September quarter. The estimates range from a low of INR 40.6 billion by Nuvama Wealth Management to a high of INR 47.2 billion by IDBI Capital Market Services.

Shree Cement is the third largest cement group in the country in terms of installed production capacity, behind UltraTech Cement Ltd. and the Adani group. The company's annual production capacity was 56.4 million tonnes at the end of 2024-25 (Apr-Mar). At the end of the reporting quarter, the company commissioned a clinker unit with an annual capacity of 3.7 million tonnes at Jaitaran in Rajasthan. Over one-fourth of the company's 24 factories in the country are located in Rajasthan, with the rest spread across 8-9 states in the country.

Shree Cement's volume is estimated to rise around 7% on year in the September quarter, ICICI Securities said. Other brokerages peg the company's on-year volume growth at 1-8%. Motilal Oswal Financial Services expects the company's blended realisation to rise around 7% on year on the back of a 6% volume growth.

The company's earnings before interest, tax, depreciation, and amortisation is seen at INR 10.0 billion, according to the average of estimates from 11 brokerages. A low base will likely enable the company to report a 54% surge in EBITDA as compared to the year-ago quarter, according to ICICI Securities.

An improvement in pricing will likely expand Shree Cement's margin in the September quarter on a year-on-year basis, brokerage Nuvama said. "Imported pet coke and non-coking coal prices are down... thereby providing some cushion (to cement companies) on the cost front," it said. The company's variable cost per tonne is seen having declined 4% on year, along with a 1% on-year decline in operating expenses per tonne, brokerage Motilal Oswal said. Shree Cement's EBITDA per tonne may rise to INR 1,051 in the September quarter from INR 780 in the year-ago quarter, according to Nuvama, while Motilal Oswal Financial expects it to rise even further to INR 1,198.

The company will announce its September quarter financial results on Oct. 28. Investors will watch out for management commentary on the outlook for cement demand, the impact of the cut in goods and services tax on demand in the second half of the current financial year, updates on capital expenditure, and the outlook for raw material and fuel costs.

The stock is down 5.7% since the company announced its June quarter earnings on Aug. 4. In the trailing quarter, the company had reported a net profit of INR 6.2 billion, nearly double compared to the year-ago quarter, amid a moderate 2.3% on-year increase in revenue from operations to INR 49.5 billion.

Of the 22 brokerage reports on the company available with Informist, 11 have a 'buy' call on the stock at an average target price of INR 33,403, nine have a 'hold' recommendation, and two have a 'sell' call at an average target price of INR 24,975. Monday, shares of Shree Cement ended at INR 28,880 on the National Stock Exchange, down 2.7% from the previous close.

Following are the September quarter earnings estimates for Shree Cement from 13 brokerage firms in descending order of the estimate of net profit:

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Edited by Saji George Titus

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