Revenue
Margin
Demand
Guidance
Tone
Event Participants
Executives
4
Ashok Bhandari, K.K. Jain, Subhash Jaju, S.H. Khandelwal
Analysts
13
Jashandeep Singh Chadha (Nomura), Rahul Gupta (Morgan Stanley), Satyadeep Jain (Ambit Capital), Prateek Kumar (Jefferies), Harsh Mittal (Emkay Global), Amit Murarka (Axis Capital), Pinakin (HSBC), Rajesh Ravi (HDFC Securities), Girija Ray (Nirmal Bang), Naveen Sahadeo (ICICI Securities), Kunal Shah (DAM Capital), Ritesh Shah (Investec), Siddharth (Kotak Securities)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Consolidated grey cement volume | 11.45 million tons (114.5 lakh tons) | +14.9% YoY vs 9.96 million tons (99.6 lakh) in Q1 FY26; -4.1% QoQ vs 11.94 million tons (119.4 lakh) in Q4 FY26; UAE April-May sales near zero due to Gulf War |
| India standalone volume | ~10.4-10.5 million tons | +17% YoY; on track for 40 million tons FY27 guidance |
| Cement realization (India standalone) | ₹4,919 per ton | Improved YoY (~₹160/ton per management) despite trade mix falling to 62% from 71% |
| Consolidated operational EBITDA | ₹1,272 crore | -4.6% YoY vs ₹1,333 crore in Q1 FY26; excludes other income |
| Consolidated EBITDA per ton | ₹1,111 | vs ₹1,339 in Q1 FY26 (-17.0% YoY); hit by petcoke-to-coal switch, costlier gypsum, higher non-trade sales |
| Blended fuel cost | ₹1.95 per kcal | vs guided ₹1.82 per kcal; management believes costs have almost peaked |
| Fuel mix (petcoke:coal) | 9:74 | vs 54:26 in Q1 FY26; contracted petcoke could not reach due to Gulf War, substituted with higher-ash coal |
| Clinker factor | 1.56 | vs 1.58 in Q1 FY26; lower factor restricts pozzolanic material addition and raises OPC output |
| Trade sales mix | 62% | vs 71% in Q1 FY26; forced shift to non-trade as OPC volumes rose |
| Blended cement ratio | 60% | vs 70% in Q1 FY26 |
| Capacity utilization (India) | 62% | North 66%, East 60%, South 57%; on expanded capacity base |
| Renewable energy share of total energy | 65% | vs 61%; ongoing green-energy ramp-up |
| RMC revenue | ₹109 crore | vs ₹40 crore in Q1 FY26 and ₹90 crore in Q4 FY26; 26 plants operational |
| Capex (Q1 FY27 spend) | ₹456 crore | FY27 India capex guidance maintained at ~₹1,500 crore |
| Consolidated net cash | ₹8,348 crore | vs ₹7,733 crore in June 2025 |
| Lead distance | 445 km | vs 459 km previously; rail share of dispatches ~9% |
Geographic & Segment Commentary
- North India: Capacity utilization 66%; volumes grew 20% YoY — the highest growth among mature regions; remains the volume anchor.
- East India: Utilization 60%; volumes flat YoY; trade-dominated market where the lower clinker factor (1.56) capped growth — Shree Cement East (100% subsidiary) expected to improve as the conversion factor normalizes.
- South & West India: Utilization 57%; sales rose from 11 to 16.9 lakh tons (+54% YoY), driven by the new plant ramp-up and deeper penetration into Maharashtra and Gujarat.
- UAE (Ras Al Khaimah): Sales were practically nil in April-May due to the Gulf War; capacity being doubled to 7 million tons by Q3 FY27, funded entirely from UAE cash reserves.
- RMC (Ready Mix Concrete): 26 operational plants (8 added in Q1; 10 more planned in Q2); revenue ₹109 crore; no meaningful EBITDA contribution yet.
Company-Specific & Strategic Commentary
- Shift to consolidated reporting: Standalone now only ~88-89% of turnover (subsidiaries contribute ~10%); management expects standalone to decline to 75-80% of revenue over ~5 years as UAE and East scale up. All future commentary will reference consolidated grey cement volume and EBITDA.
- Premiumization drive: Gap vs top peers had narrowed to ₹10-12/bag; Q1's forced non-trade skew paused progress, but management committed to resuming the drive as fuel quality and conversion factor normalize.
- Cost optimization levers: 100 electric commercial vehicles to be commissioned in FY27 (2.5x diesel capex, ~1/10th fuel cost); EV mining equipment under study; BESS pilot at select plants (85% round-trip efficiency); rail sidings under the Gati Shakti scheme; packing costs already easing with falling PVC prices.
- Northeast expansion: Initial 1 million ton plant (₹1,800 crore capex, ~₹18,000/ton) commissioning in Q4 FY28, with infrastructure sized for 4-5 million tons of final capacity; all statutory approvals in place as of the call date.
- Capital allocation: No inorganic appetite; UAE expansion funded from internal UAE cash; consolidated net cash up to ₹8,348 crore.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY27 India volume | 40 million tons (maintained) | Q1 at 10.4-10.5 million tons; Q2 guided 9-9.4 million tons; H1 at 19.5-20 million tons; upside to 40.5-41 million tons possible but not guided |
| Q2 FY27 profitability | Better than Q1 | Costs "almost peaked" in Q1 (vs Q2 earlier guided); petcoke supplies resuming, gypsum costs expected to fall, conversion factor to improve |
| Fuel cost | ~₹1.95 per kcal, stable-to-lower | Max 2-3 paisa movement expected; contingent on Middle East calm |
| Trade mix | Recovery toward historical 70:30 | Requires clinker factor to normalize with better coal/petcoke quality |
| Capex (India) | ~₹1,500 crore for FY27 | ₹456 crore spent in Q1; consolidated capex guidance to be shared after UAE data |
| UAE capacity | 7 million tons by Q3 FY27 | Ras Al Khaimah doubling on stream; funded from UAE cash |
| Northeast plant | Commissioning Q4 FY28 | 1 million ton initial capacity; infrastructure built for 4-5 million tons |
| RMC | EBITDA margin ~5% target | As plants stabilize; +10 plants planned in Q2 |
| Depreciation / tax rate | ₹2,400-2,500 crore / ~30% | FY27 estimates |
| Industry demand | 7-8% growth (India) | Shree targeting ~10% growth |
Risks & Constraints
| Risk | Context |
|---|---|
| Middle East geopolitical escalation | Contracted petcoke and Omani gypsum were already disrupted in Q1, pushing fuel cost to ₹1.95/kcal and raw material costs up; any fresh escalation "may change the equation completely" per management |
| Coal quality / clinker factor | High-ash coal substitution cut the clinker factor to 1.56, increasing OPC output, non-trade sales and unit costs; recovery depends on petcoke availability returning |
| Trade-mix and realization pressure | Trade mix fell to 62% vs 71% YoY, hurting realizations and the premiumization drive vs peers (₹10-12/bag gap); restoration to 70:30 is a key swing factor |
| Seasonal Q2 volume dip | Monsoon quarter guidance of 9-9.4 million tons vs 10.4-10.5 million tons in Q1 implies some operating deleverage |
| RMC ramp-up losses | RMC contributes no EBITDA yet across 26 plants; ~5% margin target depends on volume scaling; owned-plant model vs peers' franchisee model |
| Northeast execution risk | Media-reported protests/hearings around the Q4 FY28 plant; management confirms all approvals in place; ₹18,000/ton initial capex heavy until scaled to 4-5 million tons |
Q&A Highlights
Shift to consolidated reporting & UAE disclosure
- Question: Should analysts track consolidated rather than standalone numbers, and what is UAE's contribution to EBITDA? (Rajesh Ravi, HDFC Securities; Siddharth, Kotak Securities; Rahul Gupta, Morgan Stanley)
- Answer: Management firmly requested shifting to consolidated metrics — standalone will shrink to 75-80% of revenue over five years. Consolidated Q1 FY27: 114.5 lakh tons volume, ₹1,272 crore operational EBITDA, ₹1,111/ton EBITDA. UAE-specific EBITDA and revenue disclosures were declined twice: "I know how to catch the nose two ways... you're not going to get this answer from me." (Ashok Bhandari)
Gulf War cost impact & fuel cost outlook
- Question: What was the blended fuel cost for Q1 and when does it normalize? (Rajesh Ravi, HDFC Securities)
- Answer: ₹1.95/kcal vs guided ₹1.82; petcoke fell from 54% to 9% of fuel mix and coal rose from 26% to 74% after contracted petcoke couldn't reach; Omani gypsum was replaced by costlier domestic material. Costs "almost peaked" in Q1 (earlier flagged Q2); may rise 2-3 paisa but should stabilize/decline if Middle East remains calm. (Ashok Bhandari)
Trade vs non-trade mix & clinker factor
- Question: Why did the trade mix shift to 62% from 71%? (Amit Murarka, Axis Capital)
- Answer: High-ash coal increases ash absorption in clinker, cutting the conversion factor to 1.56 and limiting pozzolana addition; more OPC had to be sold through non-trade. Gypsum affected raw material cost only, not the trade mix. Target is to restore 70:30 trade:non-trade. (Ashok Bhandari)
Regional performance & FY27 volume guidance
- Question: How did regions perform and can Shree hit 40 million tons? (Kunal Shah, DAM Capital; Jashandeep Singh Chadha, Nomura)
- Answer: South sales rose from 11 to 16.9 lakh tons on the new plant plus Maharashtra/Gujarat penetration; North grew 20%; East was flat due to clinker-factor constraints in a trade-dominated market. FY27 guidance maintained at 40 million tons; Q2 at 9-9.4 million tons; H1 at 19.5-20 million tons; industry growing 7-8%. (Ashok Bhandari, Subhash Jaju)
Capex, Northeast economics & UAE funding
- Question: What is FY27 capex, and how is the Northeast plant viable at ~₹18,000/ton? (Jashandeep Singh Chadha, Nomura; Satyadeep Jain, Ambit Capital; Prateek Kumar, Jefferies)
- Answer: India capex ~₹1,500 crore for FY27 (₹456 crore in Q1); consolidated capex number to be shared after UAE data. The ₹1,800 crore Northeast outlay covers infrastructure for 4-5 million tons, not just the first 1 million tons; Assam/Meghalaya is a near-duopoly market. UAE doubling (to 7 million tons) is funded from UAE cash; all Northeast approvals are in place as of the call morning. (Ashok Bhandari)
Cost levers: EVs, BESS, renewables, rail
- Question: What cost-reduction initiatives are underway? (Ritesh Shah, Investec)
- Answer: 100 electric commercial vehicles to be commissioned this year (2.5x diesel capex, ~1/10th fuel cost); EV mining equipment under evaluation; renewable energy share up from 61% to 65% of total energy; BESS pilot running at select plants (85% round-trip efficiency); rail sidings contracted under Gati Shakti; rail share ~9% of dispatches. (Ashok Bhandari)
RMC ramp-up
- Question: What is RMC contributing this quarter? (Amit Murarka, Axis Capital; Rajesh Ravi, HDFC Securities)
- Answer: Revenue ₹109 crore vs ₹90 crore in Q4 FY26 and ₹40 crore in Q1 FY26; 26 plants operational (8 added in Q1, 10 more in Q2); no EBITDA yet — ~5% margin targeted as volumes scale. Management contrasted its owned-plant model with a peer's franchisee-based ~470-plant claim. (Ashok Bhandari, K.K. Jain)
Balance sheet, cash & M&A stance
- Question: What is the cash position and is inorganic growth on the table? (Harsh Mittal, Emkay Global)
- Answer: Consolidated net cash ₹8,348 crore vs ₹7,733 crore in June 2025; lead distance down from 459 to 445 km; no M&A — "we don't have the heart to buy a $5 EBITDA capacity at $110." (Ashok Bhandari)
Q2 cost trajectory, depreciation, tax & pricing stance
- Question: Should Q2/H2 operating costs be lower, and what are the depreciation and tax numbers? (Pinakin, HSBC; Siddharth, Kotak; Prateek Kumar, Jefferies; Girija Ray, Nirmal Bang)
- Answer: Q1 was "absolutely abnormal" and costs have peaked — gypsum costs should fall, clinker factor improve, and profitability recover from Q2; July sales at 3.1 million tons. Depreciation guided at ₹2,400-2,500 crore for FY27; tax rate ~30%. Management refused to give any price outlook: "I don't take a call on price." (Ashok Bhandari)
Key Takeaway
Shree Cement's Q1 FY27 was an abnormal quarter hit by Gulf War supply disruptions: contracted petcoke (54%→9% of fuel mix) and Omani gypsum were replaced by costlier substitutes, lifting blended fuel cost to ₹1.95/kcal, cutting the clinker factor to 1.56, and forcing trade sales to 62% of volumes (71% in Q1 FY26). Consolidated volume still rose 14.9% YoY to 11.45 million tons, with Indian operations up 17%, but consolidated operational EBITDA fell to ₹1,272 crore (₹1,111/ton vs ₹1,339/ton). Management maintains FY27 India volume guidance of 40 million tons (H1: 19.5-20 million tons), views costs as peaked, and expects healthier profits from Q2 as petcoke resumes and gypsum costs ease. The company is steering analysts to consolidated reporting — standalone should fall to 75-80% of turnover — as UAE doubles to 7 million tons by Q3 FY27 and ₹1,500 crore India capex stays on track. Key watch points: Middle East escalation, trade-mix recovery, and Northeast commissioning in Q4 FY28.