Shree Cement Revises Expansion Plans Amid Industry Ripples from Adani's Strategic Shift

Shree Cement Ltd Slows Down Expansion Plans Amid Industry Shift

Shree Cement Ltd, India's third-largest cement maker by capacity, has scaled back its expansion plans in response to a potential cooling of the aggressive capacity-addition cycle among top cement producers in the country. This move follows a similar decision by Adani Cements, a larger rival, just weeks prior.

The shift in strategy signals a slowdown in the industry's capacity-expansion plans, which had been driven by a desire to increase output. However, with Ambuja Cements also signalling a potential delay in its FY28-end target of achieving 155 million tonnes per annum (mtpa) capacity to FY30, the industry appears to be adjusting to a more cautious approach.

In a post-earnings interaction, Chief Financial Officer Subhash Jajoo revealed that the company had slowed down capacity expansion due to the slowing aggression of its competitors. "We have slowed down the capex because even in the last concall of one of our competitors, they have also slowed their aggression. So we will ride the wave as it is," Jajoo said.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Shree Cement Ltd's decision to scale back expansion plans comes as the company reported a strong performance in FY26, beating street expectations on revenue. The company's consolidated revenue rose by about 9% to ₹20,943.47 crore, above the consensus estimate of ₹20,748.63 crore of 18 analysts polled by Bloomberg. Profit attributable to owners rose 55% to ₹1,743.56 crore for fiscal year 2026, compared to ₹1,122.77 crore last year.

Comparison of Shree Cement Ltd's Performance

The company's domestic cement production capacity stands at 69.3 mtpa, and EBITDA rose to ₹4,637.86 crore in FY26 from ₹3,934.03 crore in FY25. Margins increased to 22.1% from 20.4%.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

In the March quarter, the cement maker reported a 10% rise in revenue from operations to ₹6,101 crore but a 8% decline in net profit to ₹525.69 crore, due to the West Asia crisis. However, management expects demand to bounce back once peace is restored, driven by reconstruction work.

Costs are rising across the board, mainly due to higher fuel, packaging, and transport expenses. Fuel costs are expected to rise by about 10% in the near term, while total costs could increase by around ₹150- ₹200 per tonne. Packaging costs are also rising and may increase by about ₹100 per tonne going forward. The company is trying to control costs by changing its fuel mix and improving logistics.

Management is positive on demand, expecting cement demand to grow at least by 7%. "If India needs to grow at 7%, steel and cement should grow at least in tandem with that, if not more," Jajoo said. The company also declared a final dividend of ₹70 per share for FY26, representing a 36% increase over the ₹110 per share dividend paid in 2024-25.