Shree Cement Ltd’s June-quarter profit fell as higher fuel and raw material costs triggered by the West Asia conflict more than offset strong double-digit volume growth. India’s third-largest cement maker said those cost pressures have likely peaked and profitability should improve from the current quarter if geopolitical conditions remain stable.
The Kolkata-based cement maker reported a consolidated net profit of ₹529 crore for the three months ended 30 June (Q1FY27), down 18% from ₹643 crore a year earlier, according to exchange filings. Revenue from operations rose 18% to ₹6,233 crore, while operating profit (Ebitda) fell 4.6% to ₹1,272 crore. Ebitda margin contracted to 20.4% from 25.2% a year earlier.
The company attributed the earnings decline to supply disruptions caused by the conflict in West Asia, which delayed shipments of contracted petroleum coke and gypsum from Oman. It was forced to replace them with costlier imported coal and domestic gypsum.
“The fuel cost has almost peaked out,” chief financial officer Ashok Bhandari said during the post-earnings call. “If nothing untoward happens in the Middle East (West Asia), this cost should more or less stabilize or rather go down because raw material cost should also come down.”
Bhandari described the June quarter as an “abnormal” one and urged investors not to extrapolate the performance. “Please consider Q1 as an abnormal quarter. I expect to do better Q2 onwards if nothing untoward happens on the Middle Eastern front,” he said.
Strong demand, weaker margins
The disruption forced to overhaul its fuel mix.
Petcoke usage fell to 9% from 54% a year earlier, while coal usage rose to 74% from 26%, increasing production costs. Greater reliance on lower-quality coal also reduced the amount of blended cement the company could produce. That forced the company to sell more ordinary Portlandthrough the lower-margin non-trade channel.
The shift weighed on the company’s sales mix. Trade sales accounted for 62% of volumes, down from 71% a year earlier, while the blended cement ratio declined to 50% from 70%.
Even so, demand remained robust. Cement sales in India rose 17% year-on-year to 10.23 million tonnes, while total sales, including clinker, increased 17.2% to 10.49 million tonnes. Premium products accounted for 23.3% of trade volumes, up from 17.7% a year earlier, reflecting the company’s continued push towards premiumization.
Bhandari said Shree Cement remained focused on profitability rather than volumes.
“We are never volume focused. We are profit focused. We have never changed our focus,” he said, while maintaining the company’s guidance of producing 40 million tonnes during FY27. He said the company had already sold around 10.5 million tonnes in the first quarter and expects to achieve about 20 million tonnes by the end of the first half, keeping it on track to meet its annual target.
The weaker performance contrasted with larger rival , where double-digit volume growth, contributions from acquired businesses and cost controls helped offset higher fuel and freight costs. The Aditya Birla Group company reported a nearly 17% year-on-year increase in consolidated net profit to ₹2,599 crore, while revenue rose 16% to ₹24,648 crore.
Looking beyond the quarter, Bhandari said standalone operations currently account for 88-89% of revenue, but that share could fall to 75-80% over time as overseas subsidiaries expand.
Capacity at the Ras Al Khaimah plant in the United Arab Emirates is expected to double by the third quarter of FY27 and reach 7 million tonnes, while busines in India’s eastern region is also expected to improve.
The company has continued expanding adjacent businesses. Its ready-mix concrete business reported a 156% increase in volumes to 236,000 cubic metres after commissioning eight new plants during the quarter, taking its network to 33 operational plants across 17 cities. Management said the business is currently operating at roughly break-even levels and expects meaningful profitability only after achieving greater scale.