Shree Cement shares rally as Q3 profit more than doubles and margin expands to 25%

Morgan Stanley noted that the strong volume growth outlook continues with a rising share of premium products. And that, better volumes coupled with a good show on opex drove good earnings before interest, taxes, depreciation, and amortisation (EBITDA) beat.

The brokerage comments come as Shree Cement’s total sale volume increased 11% YoY in the December 2023 ended quarter to 8.89 million tonnes from 8.03 million tonnes in the same quarter last year.

Following the Q3 results, SCL Managing Director Neeraj Akhoury said the company was executing a comprehensive performance improvement plan, and we are experiencing a positive impact.

"Strong volume growth along with building premium products through accelerated channel expansion and softening of fuel prices has helped us to deliver a robust improvement... We are fully prepared to complete our various projects to reach beyond 80 million tonnes of cement production capacity by the year 2028," he said.

EBITDA for the quarter surged 74% YoY to ₹1,234 crore from ₹708 crore in the year-ago period, while margin expanded by 780 basis points to 25.2% from 17.4% in Q3FY23.

The cement maker's net revenue from operations for the quarter has risen 20% YoY to ₹4,901 crore, compared with ₹4,069 crore in the same quarter last year.

Recently, the company commenced commercial production from its integrated cement plant at village Gothra in Nawalgarh Tehsil of Rajasthan having a clinker capacity of 11500 tonnes per day (3.8 MT per annum) and cement capacity at 3.5 MT per annum with effect from January 22, 2024.

The work on 18 MT capacity expansion projects already announced is running as per schedule.

Additionally, the company has decided to add one more cement mill of 3 MT per annum capacity at its upcoming plant at Ras in Rajasthan. On completion, its total India cement capacity will be around 75 MT.