Sell Shree Cement Ltd for the Target Rs. 23,330 by Choice Institutional Equities
Key Conference Call Highlights
Guidance and growth outlook
* Management has outlined a ~INR 15 Bn capex plan for FY27, primarily directed towards RMC expansion, railway sidings, and initial development activities for the Meghalaya cement project
* SRCM targets increasing its RMC network to 50–55 plants by FY27- end, strengthening its downstream presence
* The company continues to aspire for 80 Mnt cement capacity by CY29, although execution timelines remain contingent on market conditions and capital allocation priorities
* FY27 depreciation is expected at INR 16–17 Bn
* SRCM aims to achieve ~40 Mnt sales volume in FY27, including clinker sales, with growth targeted at ~100 bps above industry growth rates
* Management expects cost inflation of INR 150–200/t in Q1FY27 versus Q4FY26, largely driven by higher packaging and fuel cost
Material cost outlook
* Landed fuel cost stood at INR 1.60/kcal in Q4FY26 and is expected to rise by 10–12% in Q1FY27, led by geopolitical tensions and higher input price
* The fuel basket in Q4FY26 comprised 54% pet coke, 32% coal and 14% alternative fuels, with coal currently offering a cost advantage over pet coke
* SRCM maintains over 90 days of coal inventory, providing nearterm cost visibility
* Packaging cost increased by INR 20/t QoQ in Q4FY26 and is expected to witness a further ~INR 100/t increase in the coming quarters
* The clinker factor increased to 64.8% in Q4FY26 from 63.9% in Q3FY26, with future optimisation dependent on product mix
Pricing and market strategy
* Management has recalibrated its approach from a value-led strategy to a balanced volume-plus-profitability strategy, after narrowing the pricing gap with the market leader to INR 15–20 per bag
* The focus is now on driving higher volumes while protecting profitability and market positioning
* SRCM remains committed to passing on input cost inflation through calibrated price increases
* SRCM has already implemented price hikes of ~INR 25 per bag, reflecting its confidence in sustaining pricing discipline
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