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Shree Cement has a cost advantage. But is that enough?

February 05, 2025

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Mint New Delhi

A penny saved is a penny earned seems to be the mantra that helped Shree Cement Ltd improve its profitability in a challenging quarter.

- Harsha Jethmalani

Standalone Ebitda at ₹947 crore exceeded consensus estimates in the December quarter (Q3FY25), mainly due to a lower power and fuel cost.

Operating cost eased to a multi-quarter low of ₹3,750 per tonne in Q3. There is room for further improvement as Shree Cement has secured a fuel supply contract at a relatively lower cost of ₹1.5 per kcal, effective Q1FY26.

Other initiatives, including increased usage of green power and alternative fuels, would lead to more cost optimization.

But the stock's unimpressive performance versus sector bellwether UltraTech Cement Ltd suggests that being a low-cost producer is not enough.

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