UltraTech Cement Vs Shree Cement: Q1 performance
The Q1 results showed strong volume growth at both companies, but different margin outcomes: UltraTech maintained operating EBITDA per tonne above Rs 1,200, while Shree Cement’s operating EBITDA per tonne declined to Rs 1,111 from Rs 1,339 in Q1 FY26 as fuel and raw-material costs rose.
The two companies also gave different outlooks for the coming quarters. UltraTech expects capacity additions and improvement initiatives to support operating performance, while Shree Cement expects fuel availability to improve and profitability to recover from Q2 FY27. The brokerage preference comes as both companies focus on sustaining pricing while managing costs.
UltraTech Cement Vs Shree Cement: Brokerages bet on one stock
JP Morgan said cement demand had been stronger than initially expected and pricing had improved across the industry. It preferred UltraTech, citing its scale and ability to manage margins and volumes. Morgan Stanley also said demand had remained good and pricing had offset a significant part of cost inflation. It preferred UltraTech over peers, while its view on Shree Cement was Underweight.
UltraTech reported consolidated revenue of Rs 24,465 crore, EBITDA of Rs 5,146 crore and PAT of Rs 2,604 crore in Q1 FY27. Consolidated cement volume increased 12.2% year-on-year to 41.31 million tonnes, while capacity utilisation rose to 81%. Shree Cement’s consolidated volume increased to 114.5 lakh tonnes from 99.6 lakh tonnes, but operational EBITDA declined to Rs 1,272 crore from Rs 1,333 crore.
UltraTech Cement Vs Shree Cement: Q1 margin woes
UltraTech’s domestic grey cement realisation increased to Rs 5,218 per tonne in Q1 FY27 from Rs 5,163 per tonne in Q1 FY26. Fuel cost increased to Rs 915 per tonne from Rs 874 per tonne. Management said the company had absorbed the cost impact from the West Asia disruption, while renewable power met about 47% of its total power requirements at the end of the quarter.
Atul Daga, Chief Financial Officer, UltraTech Cement, said, “The one big theme for us quarter after quarter is demand. If the demand is good, everything falls in line, and I’m delighted to report that the first quarter of fiscal ’27 has reaffirmed that conviction emphatically.”
Shree faced a more direct disruption to its fuel and raw-material mix. Pet coke’s share of its fuel mix fell to 9% from 54%, while coal increased to 81% from 32%. Fuel cost rose to Rs 1.95 per kcal from Rs 1.82 per kcal. The shortage of Omani gypsum also forced the company to procure more expensive domestic gypsum. Its clinker-to-cement conversion factor fell to 1.50 from 1.58, while trade sales declined to 62% from 71%.
Ashok Bhandari, Senior Advisor, Shree Cement, said, “I feel, barring anything untoward happening in the Gulf war, the fuel price have almost peaked out.”
Bhandari said lower-cost contracted pet coke had started arriving and that the company expected fuel and raw-material costs to stabilise or decline if there was no further deterioration in the Middle East.
UltraTech Vs Shree Cement: Volume growth strong but utilisation differs
UltraTech’s consolidated cement volume increased 12.2% year-on-year in Q1 FY27, while domestic grey cement volume rose 13.1%. Capacity utilisation increased to 81% from 76%. Management said demand remained strong across infrastructure, housing and urban real estate.
Shree’s consolidated volume increased to 114.5 lakh tonnes from 99.6 lakh tonnes in Q1 FY26. Management said Indian operations recorded volume growth of more than 15%. Consolidated capacity utilisation was 62%, broadly similar to the year-earlier level despite the expanded capacity base. North utilisation was 66%, East 60% and South 57%.
Subhash Jajoo, Chief Financial Officer, Shree Cement, said, “Overall, it is 62%, which was almost the same as last year. Obviously this is at an expanded base because a lot of capacities have also come up.”
Shree’s South sales increased to about 16.9 lakh tonnes from 11 lakh tonnes, while North volumes grew 20%. East volumes remained broadly flat, with management citing the impact of lower-quality coal on clinker production.
UltraTech Cement Vs Shree Cement: Pricing in focus
Morgan Stanley said cement prices had increased about 4% quarter-on-quarter on average and that pricing had offset a significant part of cost inflation. It expects elevated costs to continue through Q2 FY27 before gradually normalising in the second half of FY27, provided geopolitical conditions do not worsen.
JP Morgan also said pricing discipline remained important for cement earnings and that companies had raised prices during Q1 FY27.
For UltraTech, Q2 FY27 remains a future period. Management expects the July-September quarter to carry the full impact of the West Asia disruption and the monsoon. Daga estimated that the sequential cost increase could be around Rs 130-140 per tonne and said cement pricing is expected to remain resilient through the monsoon quarter.
Shree management expects a different trajectory. Bhandari said fuel costs had almost peaked and that the arrival of contracted pet coke should help. The company expects the earlier disruption to the fuel and raw-material mix to ease, provided there is no further deterioration in the Middle East.
UltraTech Vs Shree Cement: Capacity expansion sets different growth paths
UltraTech ended Q1 FY27 with total capacity of 205.5 million tonnes, including 200.1 million tonnes in India. It commissioned 8.7 million tonnes of grey cement capacity during the quarter. Projects under execution carry capex of about Rs 17,000 crore over the next two to 2.5 years, and consolidated capacity is expected to exceed 242 million tonnes. Grey cement capacity is expected to reach 212.7 million tonnes by the end of FY27.
UltraTech had deployed about Rs 9,500 crore in capex during FY26. Management said the growth capex and cost-improvement initiatives were being funded through internal accruals. Net debt to EBITDA stood at 0.87x at the end of Q1 FY27, compared with 0.94x at the beginning of FY27.
Shree maintained FY27 capex guidance of Rs 1,500 crore after spending Rs 456 crore in Q1 FY27. Its Ras Al Khaimah expansion is expected to take UAE capacity to 7 million tonnes by Q3 FY27. The company is also targeting commissioning of its Northeast project in Q4 FY28.
The expansion programmes have different scales and regional priorities. UltraTech is adding capacity across India while investing in renewable power and cost initiatives. Shree is expanding in the UAE and East and expects these businesses to account for a larger share of consolidated revenue over time.
UltraTech Vs Shree Cement: Management guidance points to recovery
UltraTech expects its India capacity to reach 212 million tonnes by March 2027 and 235 million tonnes by March 2028. Management also expects renewable power capacity to reach between 2.5 GW and 3 GW shortly.
On margins, Daga indicated that the company expects to reach EBITDA per tonne of Rs 1,400 in the January-March 2028 quarter, provided there is no war. This is a management expectation for a future period.
Shree maintained its FY27 volume guidance at 40 million tonnes. It had completed about 10.4-10.5 million tonnes in Q1 FY27 and expects 9-9.5 million tonnes in Q2 FY27. Management expects healthier profit from Q2 FY27 onwards and expects fuel costs to remain broadly stable as contracted pet coke becomes available.
The company also expects UAE capacity to reach 7 million tonnes by Q3 FY27 and continues to target commissioning of the Northeast project in Q4 FY28.
UltraTech Cement vs Shree Cement: What JP Morgan and Morgan Stanley expect
JP Morgan preferred UltraTech after assessing Q1 demand, pricing and operating trends. The brokerage said demand had been stronger than initially expected and pricing discipline remained important for cement earnings. Its preference for UltraTech was linked to the company’s scale and ability to manage margins and volumes.
Morgan Stanley also preferred UltraTech over peers. Its assessment said demand had remained good, while pricing had offset a significant portion of cost inflation. The brokerage expects elevated costs through Q2 FY27, followed by gradual normalisation in the second half of FY27 if geopolitical conditions do not worsen. Morgan Stanley maintained an Underweight view on Shree Cement.
The brokerage preference comes against different Q1 operating outcomes. UltraTech combined double-digit volume growth with 81% capacity utilisation and operating EBITDA per tonne above Rs 1,200. Shree delivered consolidated volume growth of more than 15%, but operational EBITDA per tonne declined to Rs 1,111 because of the fuel and raw-material disruption.
Written by Shivangini Gupta
Source: Financial Express
Disclaimer: The brokerage preferences, stock views, and financial estimates mentioned in this article reflect the independent research of J.P. Morgan and Morgan Stanley, and do not constitute direct investment advice, an offer, or a solicitation by
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