- Company maintains FY’27 sales guidance of 40 mnt
- Recovery in fuel supplies to boost performance in Q2
Shree Cement reported stronger cement dispatches during Q1FY’27 across its Indian operations despite higher fuel and raw material costs arising from geopolitical tensions in West Asia.
Cement sales volume increased 17% y-o-y to 10.23 million tonnes (mnt) in Q1FY’27, while consolidated cement dispatches rose to 11.45 mnt from 9.96 mnt a year earlier. However, higher production costs impacted profitability, with operational EBITDA declining to INR 1,272 crore and EBITDA per tonne falling to INR 1,111 from INR 1,339 in Q1FY’26.
The company maintained its FY’27 sales volume guidance of 40 mnt and expects operating performance to improve from the second quarter as fuel supplies stabilise.
Demand remains healthy despite temporary disruptions
Domestic cement demand remained supported by government infrastructure spending, housing construction, and industrial projects during the quarter. However, construction activity in some regions was temporarily affected by extreme heat waves and labour shortages linked to state elections.
Demand remained healthy across most markets, particularly in north and south India, and July dispatches indicated stable market conditions. The company expects demand to remain supported through the remainder of FY’27, driven by infrastructure development and housing activity.
Cement dispatches increase 17%; premium sales continue to expand
Cement sales volume increased 17% y-o-y to 10.23 mnt during Q1FY’27 from 8.74 mnt, while total sales volume, including clinker, rose 17.2% to 10.49 mnt from 8.95 mnt. On a consolidated basis, cement dispatches increased to 11.45 mnt from 9.96 mnt in Q1FY’26.
The company also strengthened its product mix, with premium products accounting for 23.3% of total trade sales compared with 17.7% in Q1FY’26. The ready-mix concrete (RMC) business recorded strong growth, with volumes increasing 156% y-o-y to 2.36 lakh cubic metres, supported by the commissioning of eight new RMC plants. This expanded the company’s RMC network to 33 operational plants across 17 cities in 11 states.
Despite higher dispatches, changes in fuel availability affected the product mix. Trade sales declined to 62% from 71% in the same period last year, while the blended cement share reduced to 60% from 70%. Lower availability of petcoke reduced clinker substitution, forcing the company to increase production of Ordinary Portland Cement (OPC), particularly for non-trade customers.
Average cement realisation for Indian operations improved to INR 4,919/t in Q1, compared with INR 4,854/t in the corresponding quarter last year.
Higher fuel, raw material costs pressure margins
Profitability remained under pressure during Q1FY’27 as geopolitical tensions in West Asia disrupted the supply of imported pet coke and Omani gypsum, increasing fuel and raw material costs. Delays in contracted pet coke shipments forced the company to replace low-cost pet coke with higher-cost coal. As a result, pet coke’s share in the fuel mix declined sharply to 9% in Q1FY’27 from 54% in Q1FY’26, while coal usage increased to 74% from 26% during the same period.
The use of lower-quality coal also reduced clinker conversion efficiency, leading to higher clinker consumption and increased manufacturing costs. As a result, operational EBITDA declined to INR 1,272 crore, while EBITDA per tonne fell to INR 1,111 in Q1FY’27 from INR 1,339 in Q1FY’26. The company said that imported pet coke supplies have started normalising and expects fuel costs to stabilise over the coming quarters, provided geopolitical conditions do not deteriorate further.
Operational efficiency remains key focus
Shree Cement continued improving operational efficiency through higher use of renewable energy and alternative fuels. Renewable energy contributed 65% of total power consumption compared with 61% a year earlier. The company also continued investing in battery energy storage systems (BESS), electric commercial vehicles, and logistics optimisation to improve long-term operating efficiency.
Region-wise performance
Demand remained healthy across most regions during Q1FY’27. Capacity utilisation stood at 66% in north India, 60% in east India, and 57% in south India, resulting in an overall utilisation of 62%. The southern region recorded the highest volume growth following recent capacity additions, while north India also delivered around 20% volume growth. Eastern operations were affected mainly by lower clinker conversion efficiency rather than weak demand.
Capacity expansion and project updates
Shree Cement continued progressing with its expansion program during Q1FY’27.
Project updates
- FY’27 India capital expenditure guidance has been maintained at INR 1,500 crore.
- Around INR 456 crore was invested during Q1FY’27.
- The proposed northeast India project has received all statutory approvals.
- The northeast plant is targeted for commissioning by Q4FY’28 and is being designed with infrastructure capable of supporting 4-5 mnt of future capacity.
These projects will strengthen the company’s presence in high-growth markets while supporting future volume growth.
Outlook
The company expects operational performance to improve from Q2FY’27 as imported pet coke and gypsum supplies normalise, reducing fuel costs and improving clinker substitution. The company has maintained its FY’27 cement sales guidance of 40 mnt, supported by healthy infrastructure spending, housing demand, and ongoing capacity additions. Continued investments in renewable energy, logistics optimisation, and premium products are expected to improve operating efficiency and support profitability over the rest of FY’27.
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