Shree Cement hits 52-week low, down 4% on disappointing Q2 results

The company expects gradual improvement in demand driven by increased government spending in the 2nd half of the fiscal and improved demand from urban and rural segments owing to good monsoon

Shree Cement share price: Shares of Shree Cement hit a fresh 52-week low of Rs 23,500, falling 4 per cent on the BSE in Tuesday’s intra-day trade after reporting a disappointing set of numbers in the September quarter of financial year 2025 (Q2FY25). The stock has fallen below its previous low of Rs 23,714.05 touched on June 4, 2024.

 

The cement company’s standalone profit after tax (PAT) declined 81 per cent year-on-year (Y-o-Y) and 70.7 per cent quarter-on-quarter (Q-o-Q) to Rs 93.1 crore. Earnings before interest, tax, depreciation, and amortisation (Ebitda) per tonne declined 26.5 per cent Y-o-Y (-18 per cent Q-o-Q) to Rs 780 per tonne. Subsequently, Ebitda decreased by 31.9 per cent Y-o-Y and 35.3 per cent Q-o-Q to Rs 592 crore.

 

 

Meanwhile, standalone revenue declined 18.7 per cent Y-o-Y (-22.9 per cent Q-o-Q) to Rs 3,727 crore on account of decline in blended realisation by 12.3 per cent Y-o-Y and decline in sales volumes by 7.3 per cent Y-o-Y (21.2 per cent Q-o-Q) to 7.6 million tonnes.

 

Intense and prolonged monsoon conditions during Q2FY25 have impacted construction activities across the sectors leading to subdued cement demand, the company said in a statement. 

 

The management said despite strong headwinds on account of extended monsoon and softer pricing environment across the industry, Shree Cement has delivered a steady performance on the back of accelerated operational efficiency measures, focused cost optimisation drive and product premiumisation initiatives.

 

The company expects gradual improvement in demand driven by increased government spending in the second half of the financial year and improved demand from urban and rural segments owing to good monsoon. Shree Cement remains focused on its long-term growth and sustainability, with ongoing investments in capacity expansion and the adoption of greener technologies, the management said.

 

The company’s capex plan is on track and is expected to be completed by Q1FY26 thereby inching closer to the long term vision of 80 mn mt by FY28.

 

Shree Cement on market outlook said in the second half of FY 24-25, an uptick in demand is expected on account of the release of budgetary allocations and on-ground execution of the infra projects. Further, higher rural demand is expected on the back of good kharif crops and improved farm prices. Spending under additional houses in the PMAY scheme (rural and urban) and increase in industrial & commercial capex is also expected to drive cement demand in the near future.

 

ICICI Securities said Shree Cement’s operating performance was impacted, mainly on account of muted volumes & lower sales realisation. Going ahead, we believe operational performance to improve from 2HFY25 onwards led by pick-up in demand, improvement in pricing & cost saving measures. In terms of longer-term outlook, we expect volumes to remain healthy led by a capacity expansion plan of 15.4 million tonnes capacity to reach 72 million tonnes by FY26 from 56.4 million tonnes at present. Ebitda per tonne is also expected to improve hereon led by realisation improvement, continuous focus on cost saving measures (optimising freight cost & change in fuel mix) and positive operating leverage, the brokerage firm said in note.

 

Demand recovery post-elections and monsoon has been slower than anticipated, as reflected in management’s recent commentary. Our channel checks further corroborate this trend, indicating that the demand pickup has been gradual, with multiple price hikes failing to gain traction, analysts at Centrum Broking said.

 

A meaningful recovery in demand in H2FY25 remains a key monitorable, as it could drive both improved industry pricing and overall market sentiment. The average fuel cost for the quarter is Rs 1.71 per kcal, down from Rs 2.05 per kcal last year. 

 

Additionally, the company has secured a fuel supply contract at Rs 1.5 per kcal, effective from Q1FY26, which is expected to boost profitability by reducing input costs, the brokerage firm said. 

 

“We have rolled our valuation forward to September 2026 and revised target price now stands at Rs 25,562 (earlier Rs 26,300) based on 16x EV per Ebitda multiple,” it added.