Shree Cement profit slips as fuel, power bill climbs
Higher fuel and power costs came to haunt Shree Cement Ltd on Friday, as India’s third-largest cement maker reported a decline in profit despite clocking strong volume growth.
The Kolkata-based cement maker reported a 15% decline in consolidated net profit attributable to shareholders to ₹261.82 crore from ₹308.51 crore a year earlier, missing Bloomberg’s consensus estimate of ₹278.95 crore.
Revenue from operations, however, jumped 24% to ₹5,896.51 crore from ₹4,761.07 crore, supported by higher sales volumes and a stronger contribution from premium cement products.
Power and fuel expenses surged 56% year-on-year to ₹1,843.25 crore, while raw material costs jumped 52% to 725.43 crore. Freight and forwarding expenses increased 13% to ₹1,159.97 crore.
Despite short-term costs weighing on earnings, the company believes the economy is supportive for demand.
“Infrastructure, investment, urbanization and stable macroeconomic conditions are all helping. A weak monsoon may hold back rural demand for some time, but spending on road, railways, housing and data centres continues, and that will keep India cement demand moving in a positive direction,” said managing director Neeraj Akhoury said in a post-earnings conference call.
On Monday, cement market leader UltraTech also saw fuel and freight costs eat into its profitability; however, UltraTech was able to manage the cost burden better due to its higher scale and better negotiation power. UltraTech has a total capacity of 200 mtpa, compared to Shree Cement’s 69.30 mtpa.
The cement maker expects industry demand to grow 7-10% and the company to perform slightly better than the industry. It has ramped up its effort to penetrate different markets. The company is a significant player in Jammu and Kashmir and Gujarat, and making its presence in parts of South Karnataka,” said Akhoury.
“The management expects Q3 costs to be broadly similar to Q2, although packaging and other externally-driven costs remain difficult to forecast. Higher volumes could support operating leverage, but the extent of offset to cost inflation remains uncertain,” Nishant Bagrecha, a research analyst at InCred Equities.
The company’s consolidated domestic cement and clinker sales volumes grew 18% year-on-year to 9.31 million tonnes from 7.91 million tonnes. Total consolidated sales volumes, including overseas operations, increased 14% to 10.52 million tonnes from 9.23 million tonnes.
Premium products accounted for 28.7% of total trade volumes in its Indian operations, compared with 21.1% in the corresponding quarter last year, reflecting the push towards higher-value products.
The company is also expanding its production capacity. Union Cement Co., its step-down subsidiary in the UAE, commissioned a new cement mill with an annual capacity of 3 million tonnes in September, taking its total capacity to 7 million tonnes. Shree Cement also sees demand potential from UAE infrastructure, including Dubai's new airport, and opportunities to produce specialized oil-well cement for exports.
Shree Cement has established a subsidiary in China through its UAE step-down subsidiary to explore cement equipment and spare supplies.
“China, as you all know, has become a major hub for supply of cement spares as well as cement project items. China's manufacturing capacity for project-related items has doubled up and we see that there is a potential for us to reduce our dependence from European suppliers to this is first level work. We still have to see what is the kind of savings we will get from China,” said Akhoury.
In India, Shree Cement is developing a greenfield integrated plant in Meghalaya, which is expected to be commissioned in the March quarter.
Shares of Shree Cement closed 1.96% higher on Friday, outperforming the Nifty index which fell 0.17%.
Dipali Banka is a Mumbai-based journalist who treats corporate reporting less like a beat and more like a puzzle to be solved. This invariably means she has to read through annual reports and speak with leaders and analysts. She tracks policies, deals, and the pulse of industries spanning metals, mining, paints, and cement, alongside aviation. She started out as an intern at The Statesman and then completed her postgraduate diploma in journalism from Asian College of Journalism, Chennai, in 2025. Relentlessly curious at heart, Dipali is driven by the simple urge to understand how things work and who they impact. Armed with an enduring fascination for steel and aeroplanes, she moves through the churn of daily news with focus, turning complexity into clarity without losing the story. She is particularly committed to shaping numbers into objective narratives, having little appetite for vagueness that gets in her way.<br><br>Outside the newsroom, Dipali is an unapologetically loud presence who values long conversations and longer walks to unwind. She devours books of all kinds and can often be found indulging in the lyrical sway of contemporary ghazals. She ardently believes that her relationship with her bylines is more sacred than it would ever be with anyone across the human race.
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