Shree Cement dials back on expansion following Adani’s move

Shree Cement Ltd, India’s third largest cement producer by capacity, has withdrawn expansion plans just weeks after its larger rival Adani Cements flagged a similar move.

This shift signals a potential cooling of the aggressive capacity addition cycle among India’s leading cement producers as they race to increase production.

“We have slowed down the capex (capacity expansion) because even on the last call of one of our competitors, they have also slowed down their aggression. So we will ride the wave as it is,” chief financial officer Subhash Jajoo told analysts in a post-earnings interaction responding to a question about the expansion.

Ambuja Cements, in its last quarter’s analyst call, had said that it was open to postponing its FY28 end target of achieving 155 million tonnes per annum (mtpa) capacity by FY30 as it plans to increase the utilization of its existing capacity.

“We say we need to reach 80 million tons by 2029. But please understand that this is a dynamic situation,” Jajoo said.

Shree Cement Ltd beat Street’s revenue expectations in FY26 on strong volumes that helped cushion rising input costs due to West Asian war.

The company reported consolidated revenue ₹20,943.47 crore for the year, above the consensus estimate of 20,943.47 crore, up nearly 9% on FY26, as per stock exchange filings. ₹20,748.63 crore from 18 analysts surveyed Bloomberg. Profit attributable to owners increased by 55% ₹1,743.56 crore for fiscal year 2026 ₹1,122.77 crore last year.

The company currently has a domestic cement production capacity of 69.3 mt/year.

EBITDA increased ₹4,637.86 crore in FY26 ₹3,934.03 crore in FY25 and margins increased from 20.4% to 22.1%.

The cement maker reported a 10% increase in revenue from operations in the March quarter. ₹6,101 crore but there was 8% decline in net profit ₹525.69 crore as sales fell due to the West Asian crisis.

“Sales have slowed down due to the tension in the Middle East for the last two months, but with the ceasefire, the situation is slowly returning to normal. We believe that demand will recover due to reconstruction works when peace is achieved.”

The company said costs increased overall, mainly due to increased fuel, packaging and shipping expenses. Fuel costs are expected to increase by approximately 10% in the near term, while total costs are expected to increase by approximately 10%. ₹150– ₹200 per tonne. Packaging costs are also increasing and may increase by approx. ₹100 per tonne going forward. At the same time, transportation costs have increased.

Management said the cost situation is “very dynamic” as global fuel prices continue to change and higher prices gradually impact costs even if there is sufficient stock. The company is trying to control costs by changing the fuel mix and improving logistics, but the entire industry is facing similar pressures and is raising prices to manage them, he added.

“The industry as a whole is suffering for these two reasons… there is a conscious effort to provide a price increase that will mitigate this cost increase,” Jajoo said.

However, in the future, the management views the demand positively. The finance chief expects cement demand to rise by at least 7%. “If India has to grow at 7%, steel and cement must grow at least along with it, if not more,” Jajoo said.

The company also announced its final dividend distribution. ₹70 per share for FY26. As a result, the total annual dividend amount is as follows: ₹150 per share, representing a 36% increase over the previous year ₹Dividend of 110 per share paid in 2024-25.