Target: ₹27,400
CMP: ₹25,554.10
Shree Cement’s Q4FY26 standalone EBITDA (declined 9 per cent year on year) came largely in-line with BNPPe/consensus as a volume-driven revenue beat was largely offset by margin miss. CLC volumes rose c9 per cent to 10.8 million tonne (mt), while the blended realisation was up 3 per cent q-o-q, though down 2 per cent y-o-y on a lower trade mix. Operating cost/tonne was flat on quarter, despite Q4 operating leverage and only a partial ₹20/tonne packaging cost impact in Q4. EBITDA/tonne of ₹1,161 was 5 per cent below BNPPe.
During Q4, Shree Cement commissioned its integrated unit at Kodla (3.5 mtpa), taking its FY26 domestic cement capacity to 69 mtpa, while FY27 capex guidance remains lower at ₹1,500 crore with the focus on RMC, rail sidings and Meghalaya unit (1 mtpa). While the company retained the 80-mtpa capacity target by FY29, it remains contingent on the demand outlook and capacity utilisation. On the cost front, it expects ₹150-200/tonne increase in Q1FY27 (vs. Q4). The green power share was 61 per cent in Q4FY26, while the premium product mix stayed at 22 per cent of trade sales.
Shree Cement aims to correct its volume trajectory (FY27E volume guidance at 40 mt) while holding prices. However, with Shree Cement having the highest green-power share, we prefer players with more cost-efficiency headroom in the current inflationary scenario. Factoring in Q4, we tweak our FY27-28E EBITDA, leading to a 2 per cent rise in TP.