Shree Cement’s September quarter was a mixed one. Higher operating costs weighed on margins, but Jefferies said the company’s premiumisation strategy, cost-efficiency measures and disciplined pricing continued to provide a floor for profitability. The brokerage maintained its Buy rating on the stock, projecting a 17% upside as the company stays focused on its “value over volume” strategy while expanding capacity.
Jefferies said Shree Cement’s September-quarter earnings were impacted by higher costs and weaker realisations, but the firm’s focus on premium cement mix and operating leverage in coming quarters should help restore margins.
Jefferies on Shree Cement: Higher costs led to profit miss
Outlining highlights of Shree Cement Q2 numbers, Jefferies said overall cost per tonne rose 5% sequentially, partly because of one-time expenses of about Rs 30 per tonne linked to the Guntur plant. “Despite soft pricing, the company continues to prioritise margin and mix improvement over aggressive volume growth,” the report said.
Net sales for the quarter rose 4% supported by steady volumes even as realisations softened sequentially.
Jefferies on Shree Cement: Volume growth steady, premium mix improves
Cement volumes grew about 5% year-on-year, broadly in line with expectations. Jefferies said Shree Cement’s share of premium products rose to 21%, compared with 15% a year ago, as the company maintained its focus on high-margin segments.
Realisation per tonne was down 1.5% quarter-on-quarter, but still up nearly 9% year-on-year, showing resilience in pricing even amid regional demand fluctuations. “SRCM’s continued mix improvement is a positive sign and should support margin stability despite cost pressures,” Jefferies said.
The brokerage added that domestic demand from the north and east regions remained steady, though competition in some southern markets kept realisations under check.
Jefferies on Shree Cement: Management stays firm on value-over-volume
Jefferies said management reiterated its “value over volume” approach, focusing on quality of earnings rather than market share expansion. The company is aiming for higher premium cement contribution and better logistics efficiency through increased rail share.
The share of rail freight currently stands at 11% of dispatches, and management targets 20% over the next two years.
Jefferies on Shree Cement: Capex guidance steady at Rs 3,000 crore
Jefferies said Shree Cement maintained its FY26 capex guidance at around Rs 3,000 crore, in line with the company’s long-term expansion roadmap. The brokerage noted that capacity expansion remains on track, with installed capacity expected to reach 67 million tonnes per annum (MTPA) by FY26 end and 80 MTPA by FY28–FY29.
“Execution on upcoming projects and steady capacity addition keep volume growth visibility intact even as management avoids aggressive discounting in weak price environments,” Jefferies said.
The brokerage added that Shree Cement’s disciplined capital allocation continues to differentiate it from peers, supporting a stable return profile.
Jefferies on Shree Cement: UAE operations strong contributor
Jefferies highlighted that the company’s UAE operations were a bright spot in the quarter, with EBITDA up 158% year-on-year and volume growth of 34%. The segment benefited from better demand and stable pricing.
While the overseas business remains a small part of the consolidated mix, Jefferies said the improved performance adds incremental earnings support and underscores Shree Cement’s operational diversification.
Jefferies on Shree Cement: Valuation and outlook
Jefferies retained its Buy rating on Shree Cement, with a revised target price of Rs 33,420, implying a 17% upside from the current market price of about Rs 28,600.
“While near-term margins may remain volatile, structural levers like premiumisation, AFR adoption, and logistics efficiency should drive gradual recovery,” the report stated.
Jefferies on Shree Cement: Risks and what to watch
The brokerage flagged risks from fuel cost volatility, sustained pricing pressure in southern markets, or delays in capacity ramp-up..
“Rising competition in core markets or a sharp fall in petcoke prices benefiting peers could limit relative performance,” Jefferies warned. However, it added that Shree Cement’s strong balance sheet and improving cost structure position it well to weather short-term fluctuations.
Why Jefferies remains positive
Jefferies said Shree Cement’s strategy of balancing growth and pricing discipline continues to set it apart in an increasingly competitive cement market.
“Shree Cement remains a play on disciplined expansion and steady operating improvement,” Jefferies said. “Management’s focus on sustainable profitability rather than aggressive volume-led growth gives the company a long-term valuation edge.”
At current levels, the brokerage expects 17% total return potential over the next 12 months as margins recover and the company benefits from scale efficiencies.