Shree Cement’s Q1 FY27 saw a 17% year‑on‑year increase in volumes, yet its standalone operating performance was weaker than expected because higher production costs cut into profits.
Blended net sales revenue (NSR) rose 2.3% quarter‑on‑quarter, helped by price hikes and a larger share of premium products. However, EBITDA per tonne dropped to INR1,024 from INR1,115 due to increased plant & factory (P&F) and freight costs.
The cost rise stemmed from disruptions in contracted pet coke and gypsum supplies after the Middle East conflict. The company had to use higher‑cost, low‑quality domestic coal, which lowered clinker conversion rates, pushed up OPC sales, and hurt realisations.
Management expects these cost pressures to ease from Q2 FY27 as pet coke supplies normalise. It has kept its FY27 volume guidance at roughly 40 million tonnes, representing about 10% year‑on‑year growth.
The report lifts FY27/28 EBITDA estimates by 5% and 3% respectively on a higher volume assumption. At current market price, the stock trades at 15.1 times FY28 expected EV/EBITDA. The recommendation remains ‘Accumulate’ with a revised target price of INR29,085, valuing the shares at 17 times March 2028 expected EV/EBITDA.