Shree Cement dials back on expansion following Adani’s move

Shree Cement Ltd, India’s third-largest cement maker by capacity, has dialled back its expansion plans just weeks after larger rival Adani Cements flagged a similar move.

The shift signals a potential cooling of the aggressive capacity-addition cycle among India’s top cement producers, who had been racing to scale up output.

“We have slowed down the capex (capacity expansion) because even in the last concall of one of our competitors, they have also slowed their aggression. So we will ride the wave as it is,” chief financial officer Subhash Jajoo told analysts responding to a question on expansion in a post-earnings interaction.

Ambuja Cements had said in the last quarter’s analyst call that it was open to pushing back its FY28-end target of achieving 155 million tonnes per annum (mtpa) capacity to FY30 as it looks to raise utilization of its existing capacity.

“We are on record saying that we should reach 80 million tonnes by 2029. But then, please understand, it’s a dynamic situation,” Jajoo said.

Shree Cement Ltd beat Street expectations on revenue in FY26, as volumes helped cushion rising input costs linked to the West Asia war.

The company reported a consolidated revenue of ₹20,943.47 crore for the year, rising about 9% in FY26, according to exchange filings, above the consensus estimate of ₹20,748.63 crore of 18 analysts polled by Bloomberg. Profit attributable to owners rose 55% to ₹1,743.56 crore for fiscal year 2026, compared to ₹1,122.77 crore last year.

At present, the company has a domestic cement production capacity of 69.3 mtpa.

Ebitda rose to ₹4,637.86 crore in FY26 from ₹3,934.03 crore in FY25, and margins increased to 22.1% from 20.4%.

For the March quarter, the cement maker reported a 10% rise in revenue from operations to ₹6,101 crore but a 8% decline in net profit to ₹525.69 crore, as sales were down due to the West Asia crisis.

“Since the last two months, due to the tension prevailing in the Middle East, sales have slowed down, but with the ceasefire, the situation is gradually coming back to normal. We believe once peace is restored, demand will bounce back due to the reconstruction work,’ he said.

The company said costs are rising across the board, mainly due to higher fuel, packaging and transport expenses. Fuel costs are expected to rise by about 10% in the near term, while total costs could increase by around ₹150– ₹200 per tonne. Packaging costs are also rising and may increase by about ₹100 per tonne going forward. At the same time, transport costs have also increased.

Management said the cost situation is “very dynamic” because global fuel prices keep changing, and even with enough inventory, higher prices slowly impact costs. The company is trying to control costs by changing its fuel mix and improving logistics, but added that the entire industry is facing similar pressures and raising prices to manage them.

“The industry as a whole is suffering on these two accounts… there is a conscious effort… to try and have a price rise which should mitigate this cost increase,” Jajoo said.

However, going forward, the management is positive on demand. The chief financial officer expects cement demand to grow at least by 7%. “If India needs to grow at 7%, steel and cement should grow at least in tandem with that, if not more,” Jajoo said.

The company also declared a final dividend of ₹70 per share for FY26. Consequently, the total dividend for the year stands at ₹150 per share, representing a 36% increase over the ₹110 per share dividend paid in 2024-25.

Shree Cement’s FY26 performance has been mixed with a higher focus on value over volume, leading to marginal volume growth, but realizations improved, said Manish Valecha, co-head of research and lead cement analyst at Anand Rathi Securities.

Compared to peers, the performance has been slower because of higher exposure to North and East, where pricing has been competitive, and it hasn’t had the same inorganic boost in volume from large acquisitions, he said. Going forward, Ebitda per tonne recovery, volume growth vs industry, pricing discipline, cost efficiency and capacity ramp-up will be watched.

The Anand Rathi analyst believes demand should remain decent but not exceptionally strong. “Government infrastructure, housing and seasonality support dispatches, but near-term demand can still be uneven because of weather (high heat) and geopolitical issues. Pricing is the bigger uncertainty. The industry has taken small hikes, but sustainability depends on monsoon intensity, Competitive discipline, input cost pressure, etc.,” Valecha said.