Shree Cement reported a 29.2% decline in June quarter net profit to ₹438 crore due to higher fuel and raw material costs. Despite the profit miss, the company saw a 17% increase in sales volumes, showing strong market demand. The stock fell 1.23% following the results as investors weighed volume growth against margin pressure.
Shree Cement reported its financial performance for the June quarter on Friday, showing a 29.2% year-on-year decline in standalone net profit to ₹438 crore. The figure missed analyst expectations, which had projected a profit of around ₹499 crore. While the company's revenue from operations grew by 13.6% to ₹5,622.7 crore, exceeding market estimates, profitability was heavily impacted by rising input costs.
Impact of Commodity Prices on Margins
The company’s operating profit, or EBITDA, fell by 12.6% to ₹1,074.4 crore compared to the same period last year. A key concern for investors was the sharp contraction in the EBITDA margin, which dropped to 19.1% from 24.8% a year ago. Management explained that the decline was primarily caused by the rising costs of fuel and raw materials, worsened by the ongoing crisis in West Asia, which has pushed up global commodity prices. This pressure on margins remains a significant factor for investors to track in upcoming quarters.
Volume Growth and Expansion Strategy
On the positive side, operational indicators showed strong demand. Cement sales volume rose by 17% year-on-year to 10.23 million tonnes. The company’s focus on higher-value products is also yielding results, with premium products now accounting for 23.3% of trade volumes, up from 17.7% a year earlier. Furthermore, the company’s Ready-Mix Concrete (RMC) segment saw a volume jump of 156% to 2.36 lakh cubic metres, following the addition of eight new plants.
Long-Term Outlook and Monitorables
Shree Cement continues to push forward with its capacity expansion plans. The construction of a new integrated cement plant in Meghalaya is moving ahead as scheduled, with the company aiming for commissioning by the March 2028 quarter. The company is also working on improving its Thermal Substitution Rate, which reached 5.1% this quarter, to help manage energy costs through the use of alternative fuels. Shares of the company were trading 1.23% lower at ₹26,130 in afternoon trade on Friday, following an overall decline of over 15% in the past year.
Investors may continue to monitor how the company balances its aggressive volume growth with the ongoing pressure on profit margins from global fuel costs. The effectiveness of its cost-saving measures and the timely execution of its long-term expansion projects will be key areas to follow in future quarterly reports.