Shree Cement Q2 FY27 Earnings Call: Guides 40-41 MT Volumes, Premium Mix Hits 29% (SHREECEM)

Shree Cement Ltd held its Q2 FY27 earnings call on October 23, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Volume-Led Quarter in a Seasonally Soft Period

• India volumes +18% YoY to 9.31 MT — from 7.91 MT in Q2 FY 2025-2026; realizations improved 1% YoY to Rs.4,870/ton from Rs.4,840/ton. Consolidated volumes grew ~14% YoY to 10.52 MT.
• Consolidated EBITDA rose ~4% YoY to Rs.1,016 Cr — from Rs.974 Cr; however, EBITDA/ton declined to Rs.966 from Rs.1,055 YoY, primarily due to higher fuel cost.
• Sequential softness was seasonal — India volumes -11% QoQ (from 10.49 MT), realization -1% QoQ (from Rs.4,919), consolidated EBITDA down from Rs.1,272 Cr; EBITDA/ton at Rs.966 vs Rs.1,111 in Q1 FY 2026-2027.
• India capacity utilization improved to 56% — from 52% in Q2 FY 2025-2026; the quarter was further impacted by the West Asia conflict and a weak monsoon across most regions (East the exception).
• Blended cost of production rose to Rs.4,636/ton — from Rs.4,329/ton in Q1 FY 2026-2027 and Rs.4,245/ton in Q2 FY 2025-2026; cement-only cost data not available and to be shared separately.
• Effective tax rate ~32% in Q2 — ~31% in H1 FY 2026-2027; management guided to assume 31-32% for FY 2026-2027, noting the company remains in the old tax regime (~30% for FY 2026-2027).
• Ready-mix concrete scaled sharply — Q2 FY 2026-2027 volumes +153% YoY to 2.73 lakh cubic meters, revenue +182% YoY to Rs.129 Cr; network now 28 commercial plants (35 total), and the business remained EBITDA positive.

Premium Push, Balanced Regional Growth, Trade Still Core

• Premium share reached 29% of sales in Q2 FY 2026-2027 — up from 23% in Q1 FY 2026-2027 and 21% in Q2 FY 2025-2026; MD Neeraj Akhoury said the ~30% level came sooner than he had expected, with an internal ambition of 100% premium mix and a target to cross 40% in a few years (both period unspecified).
• Premium pricing carries a Rs.25-35 premium — over base products including at wholesale; newer products such as Total and Marble command Rs.35-40 above base. The company launched "Bangar Total", its first waterproofing cement.
• Trade mix at 61% in Q2 FY 2026-2027 — management rebutted an inference of flat YoY trade volumes, stating trade volumes also grew; the non-trade rise was framed as strategic participation in large institutional, infrastructure and railway projects, with trade to be pushed "equally hard or even harder".
• Regional growth was balanced — South led, followed by North, then East; the large part of volumes comes from the North with the balance equi-mixed between East and South. Management refuted claims of withdrawal from less remunerative markets as "totally untrue", citing penetration into Jammu & Kashmir, Gujarat and first presence in parts of South Karnataka.
• Peers indicated Rs.20-25/bag price increases — in north and east markets (October/end-September vs Q2 FY 2026-2027 average); Shree's October prices are better than September and management expects to deliver better prices than Q2 FY 2026-2027, while noting price remains a function of demand and supply.
• Blended cement share fell to ~58% — from ~68% in FY 2025-2026, per CFO Subhash Jajoo; the company will no longer disclose clinker volumes separately going forward.

Fuel Cost Inflation Is the Key Margin Drag

• Landed fuel cost rose to Rs.2.09 (kcal basis) — from Rs.1.66 in Q2 FY 2025-2026 and Rs.1.95 in Q1 FY 2026-2027; CFO guided Rs.2.15-2.20 for Q3 FY 2026-2027 based on the order pipeline.
• Fuel mix pivoted away from pet coke — Q2 FY 2026-2027 mix: pet coke ~11%, imported coal 75%, Indian coal 2%, alternative fuels 12%; pet coke was reduced from ~66% in FY 2025-2026 due to increased pet coke prices.
• Thermal substitution rate (TSR) rose to ~5% — from ~2-3%, driven by higher alternate fuel consumption; the cost benefit of AFR is too early to quantify and will be known only once TSR reaches ~6-8% (period unspecified).
• Freight cost per ton declined significantly — attributed to lower sales run to market, special lean-season railway discounts, and new data-based freight fixation processes; management cautioned savings may not be fully retainable and must be assessed over a longer period, though confirmed no one-offs in the Q2 FY 2026-2027 number.
• Change-in-inventory swing of ~Rs.100 Cr — within raw material cost (vs Rs.69 Cr in Q1 FY 2026-2027), attributed to Kalinga production running ~33% higher than September 2025; expected to normalize to ~Rs.60-70 Cr by end of FY 2026-2027 if demand holds.
• Q3 FY 2026-2027 costs expected broadly similar to Q2 — fuel is forecastable from purchases already made, but externally-driven lines such as bag costs are moving rapidly and remain difficult to forecast.

Organic Growth Path: UAE Mill, Meghalaya, 80 MT Ambition

• Union Cement Company (UAE step-down subsidiary) commissioned a 3 MTPA cement mill — in September 2026 (Q2 FY 2026-2027), taking its total cement production capacity to 7 MTPA; management justified the addition on converting clinker into cement for a robust UAE demand market, plus specialized products like oil well cement for export to the Middle East, US and parts of Europe.
• Meghalaya greenfield plant on track — expected commissioning in the quarter ending 31st March 2028 (Q4 FY 2027-2028); a state-authority hearing was held with supporters and opponents, management said doubts have been cleared by the state government and construction should start very soon, with no delays anticipated.
• Capacity scaled from 46 MT to 70 MT — with volumes rising from ~24-25 MT (3-4 years ago) to ~40-42 MT as of Q2 FY 2026-2027; management reiterated it does not grow by acquisition, noting an organically built plant takes ~3 years to be fully utilized.
• Management has a commitment to reach 80 million tonnes capacity "very soon" — (period unspecified) and is working toward that number; beyond Meghalaya, management said it will reach 180 million tons of capacity in the short term (period unspecified).
• New-capacity ramp-up guidance — new capacity takes 2-3 years from startup to attain maximum sales, with first-year utilization typically ~15-20% (general ramp-up guidance; period unspecified).
• UAE demand remains robust despite the Middle East/West Asia crisis — which management called a "slight issue"; management cited the new Dubai airport now under construction as a very high cement consumer, with recent months' volumes in line with forecast.

AFR, Renewables, EVs and a China Sourcing Experiment

• Green electricity was 65.2% of total consumption — in Q2 FY 2026-2027 (including wholly owned Indian subsidiaries); green power generation capacity stands at 667 MW, with 80 MW more being put up (period unspecified).
• Power facility breakup: ~1,170 MW total — of which 503 MW is thermal and 666 MW is green (including WHR, solar and wind); the CFO declined to disclose external power sales or CPP earmarked for external sale, citing a decision taken ~3-4 quarters back not to report power numbers separately.
• EV pilots in mining and logistics are in early testing — management asked for a few more quarters before a stronger assessment of mining EVs vs traditional-fuel machinery; clinker and cement transportation EV trials are in a first phase, with longer-term plans to be shared after a few more quarters.
• China sourcing office via a UAE step-down subsidiary — MD Neeraj Akhoury said the company is opening an office in China to source cement spares and project items for India and UAE requirements, aiming to reduce dependence on European suppliers; he framed it as an "experiment", conditional on demonstrated savings, noting China's manufacturing capacity for project-related items has doubled.
• UAE chosen as routing preference over a direct India route — due to easier visa processes and a strong Chinese engineer presence there; management cited historical India-China fault lines as the reason, with intent to learn how Chinese industry builds and holds costs.
• Sustainability metrics maintained — all manufacturing locations operate on zero liquid discharge with 100% wastewater treated/recycled/reused; water positivity index exceeded 8x in FY 2025-2026, with management committed to sustaining/improving this in FY 2026-2027.

H2 FY 2026-2027 Outlook: Volumes, Capex and Guidance

• Volume guidance reaffirmed at 40-41 million tons for FY 2026-2027 — MD Neeraj Akhoury added they may reach up to 41 million tons; after 17% volume growth in Q1 and Q2 FY 2026-2027, management expects H2 FY 2026-2027 growth slightly better than industry.
• Industry-wide India cement demand growth cited at 7-10% for Q2 FY 2026-2027 — per varying estimates, with clearer industry data awaited; if industry demand grows ~7% over Q3-Q4 FY 2026-2027, Shree Cement should grow a little better than that.
• Q3-Q4 FY 2026-2027 performance guided better or similar to Q2 — management said, supported by demand and completed cost work, it "should be able to" deliver reasonably better, if not similar, performance numbers versus Q2 FY 2026-2027, continuing the same price and cost levers over the next several quarters (period unspecified).
• UAE volumes guided at ~4-5 million tons for FY 2026-2027 — on a YoY full annualized basis; ~2.1 million tons delivered in 1H FY 2026-2027 (analyst cited ~7% YoY decline in 1H), with a similar run-rate expected in 2H and the new 3 million ton capacity contributing ~30% (guidance within a 30-40% range). CFO declined to disclose UAE revenue and EBITDA margins separately.
• Capex of Rs.9,895 Cr in H1 FY 2026-2027 — with H2 FY 2026-2027 capex expected at around Rs.700-800 Cr; consolidated net cash at group level was Rs.8,168 Cr as of Q2 FY 2026-2027.
• Weak monsoon is the only demand concern — may hold back rural demand for some time, but infrastructure, railways and data centers spending is expected to keep India cement demand moving in a positive direction.
• Working capital items flagged as timing effects — the ~Rs.600 Cr inventory increase in the Q2 FY 2026-2027 cash flow was explained as ~Rs.300 Cr of delayed trade receivables (sales on 30 September, payment received 1 October) plus ~Rs.500 Cr of investment sale proceeds received 1 October.