Shree Cement strives to regain its mojo
₹1,347 in the industry for the third consecutive quarter, according to Nomura Financial Advisory and Securities (India). Shree Cement remains the lowest-cost producer, added the Nomura report. Fuel costs were largely stable at ₹1.82/kcal in Q4FY24 and are expected to remain at this level in Q1FY25, the management said.
The company continues to invest in cost-efficiency improvement measures such as higher green power share and logistics competence. The share of green power consumption in its total power consumption increased to 55.9% in FY24, the highest in the industry, from 51.1% in FY23. The management aims to increase the green power mix to 65% by FY26, likely ahead of peers.
The company saves around ₹3 per unit of power from transitioning to green power, and total green power additions over FY25-26 are expected to be 188MW. In Q4FY24, sales volume (cement and clinker) stood at 9.53 million tonnes (mt), up around 8% year-on-year. Sales volume guidance for FY25 was retained at 39-40 mt compared to 35.5 mt achieved in FY24.
The management remains optimistic about cement demand growth despite the recent moderation, expecting the government’s continuous focus on infrastructure spending and house building activities to drive demand H2FY25 onwards. More importantly, Shree Cement's capacity expansion (capex) plans remain on track to reach 62 million tonnes per annum (mtpa) by FY25. The company will incur ₹12,000 crore capex over the next three years, financed via cash and internal accruals.
The management has reiterated its target of reaching 80 mtpa capacity by FY28. Amid heightened competition, timely capacity additions provide volume growth visibility and should bode well for market share gains. A debt-free balance sheet
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