Shree Cement Q2 Results: Net profit surges 159% to ₹491 crore on strong demand

The surge in net profit came on the back of strong infrastructure demand which led to better sales amid declining raw material prices. The cement maker said its total sale volume increased 10 per cent to 8.20 million tonnes, compared to 7.46 million tonnes. 

India’s second-biggest cement company’s revenue from operations in the second quarter of current fiscal stood at ₹4,585 crore, registering a growth of 21 per cent, compared to ₹3,781 crore in the year-ago period.

Also Read: Shree Cement Q2 Result Preview: Improved realisations, lower costs likely to aid per tonne profitability

The capacity utilisation improved from 65 per cent to 71 per cent year-on-year (YoY). The sale of premium products rose to 9.5 per cent, compared to 7.5 per cent of total trade sales on a YoY basis.

On the operating front, the company’s earnings before interest, tax, depreciation, and amortization (EBITDA) in the September quarter stood at ₹869.6 crore, registering a surge of 66 per cent, compared to ₹523.6 crore in the year-ago period.

Neeraj Akhoury, Managing Director, Shree Cement Ltd. while commenting on the performance said, “We are excited to announce our Q2 performance with strong EBIDTA generation of ₹870 crore on the back of volume growth of 10 per cent and improved operational matrices.

‘’As the country enters into a multi-year strong demand cycle, we are aggressively marching ahead on our expansion plans to achieve our target of going beyond 80 million tons capacity by 2028,” added Akhoury.

The company’s board approved merger of Shree Cement East Pvt. Ltd. and Shree Cement North Pvt. Ltd., wholly owned subsidiaries of the Company into Shree Cement Ltd. as well. 

The board also approved setting up of brownfield cement grinding capacity of 3.40 million tonnes per annum capacity at the company’s existing facilities at Baloda Bazar district of Chhattisgarh with estimated capital expenditure of ₹550 crore. The project is estimated to be completed by September 2025.

“Cement demand in India is expected to remain robust in the mid-term on account of rising expenditure on infrastructure and housing development,” said the company on the industry outlook.

According to a Jefferies’ pre-earning note, cement prices during the quarter increased ~0.5-1 per cent at the all-India level, with the rates rising the most in the country’s eastern region. 

The price rise comes as the sector faces intense competition as companies increase their capex to ramp up production to maintain market share. Last year, cement companies were greatly impacted by weak prices and elevated operating costs due to the Russia-Ukraine war.

India, the world’s second-largest cement producer, has seen most of its cement companies report a rise in profit during the quarter, helped by the government’s infrastructure push ahead of state and general elections. The country also saw its weakest monsoon since 2018, leading to more days for infrastructure activity, according to news agency Reuters.

Ahead of the announcement of Q2FY24 results, shares of Shree Cement settled 0.99 per cent higher at ₹26,661.20 apiece on the BSE.

Milestone Alert!Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

Updated: 07 Nov 2023, 09:45 PM IST