Cement manufacturer Shree Cement Ltd told investors in its post-earnings call that the company is planning to stabilise sales in its premium products category in order to seek better realisations in an industry-wide tight pricing environment. In the July-September quarter, premium products, which have higher price points and thus higher realisations formed around 15 percent of Shree Cement's trade sales.
Over the past few years, Shree Cement has directed its marketing efforts towards placing itself in the "premium" cement category, including an unified "Bangur Cement" brand, as well as the launch of premium brands in some markets, such as Odisha.
Shree Cement is present largely in the northern, eastern, and southern markets, with the former two making up 89 percent of the company's sales during the quarter, its management said in the post-earnings call. According to analysts, cement pricing was weak in all three regions, particularly in the south and east, and the company's volumes reported declines in all three regions, with southern markets being the hardest hit.
The company reported an 83 percent-plunge in its consolidated net profit for Q2 to Rs 76.44 crore, while its revenues for the quarter declined by around 15 percent over the same period. During the call, the company's Managing Director Neeraj Akhoury told investors that despite the sharp drop in the bottomline, as well as a 7 percent decline in volume on an annual basis, the focus on "value over volume" ensured that realisation losses were softened to some extent.
Going ahead, Akhoury said that the focus will be on maintaining some level of pricing discipline, over chasing volumes, and will aim to "stabilise" premium sales volumes at around 15 percent of overall trade sales. On a sequential basis, Shree Cement's realisations were slightly lower in the July-September quarter, at Rs 4,447 per tonne.
As for the sectors that dragged down demand during Q2 FY24, the company's management identified both the real estate and infrastructure, especially the latter, as government project awards were delayed in the post-General Election process, as a new Union Budget was passed in Parliament, and the presidential assent was received in August. MD Akhoury added that government orders will be key in the second half of FY25 towards recovery of demand.
In the company's existing capital expenditure plans worth Rs 7,000 crore announced last year, nearly all of them are on track for commissioning in the first quarter of FY26, Akhoury added. The projects expected to be commissioned in that quarter include cement grinding and clinker projects at Jaitaran in Rajasthan, Kodla in Karnataka, Chhattisgarh's Baloda Bazar, and at Etah in Uttar Pradesh. The management added that another of the planned expansion projects, near Bengaluru, is awaiting various regulatory approvals.
On November 11, Shree Cement's shares on the National Stock Exchange closed 0.5 percent lower from the previous close at Rs 24,423.50 apiece.
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