Shree Cement Bets on Premiumization Over Volumes

continues to prioritize value over volumes, resulting in a fourth straight quarter of market share loss in Q1FY26. Cement sales fell 7% YoY and 9% QoQ to 8.95 million tonnes, underperforming the industry. Despite this, the company posted the highest realization gain among peers—₹203 per tonne sequentially—driven by price hikes and growing premium product share (17.7% of trade sales, up from 15.6%). While Ebitda per tonne declined QoQ to ₹1,373, it remained the highest in the sector. Green power usage improved to 65.6% of total consumption, far ahead of peers UltraTech (40%) and Ambuja (28%), helping control energy costs. However, the shift towards premiumization, coupled with weak demand in northern India and rising freight costs, kept overall volumes and margins under pressure. Utilization dropped to ~57%, and analysts expect it to remain low (60–62%) through FY28, impacting return ratios. Shree Cement is still pushing ahead with aggressive expansion—adding 6.4mtpa capacity in April, with plans to reach 80mtpa by FY28 and annual capex of ₹4,000 crore. Its UAE arm, UCC, is also expanding with a 3mtpa brownfield project. Despite near-term concerns, the stock is up 18% in 2025, outperforming peers. However, with seasonal weakness in Q2 and flat pricing, growth momentum may be challenged.