Shree Cement sold 18% more cement in India, but fuel costs ate most of the gain

Shree Cement sold about 18% more cement in India in the September 2026 quarter and kept little of the gain. Sales rose 23.9% from a year earlier. Operating profit, measured before depreciation and the same figure the company reports as EBITDA, rose only 4.3%, and profit before tax fell 15.4%. The reason the company gives is fuel, a cost management had said in July had almost stopped rising.

Selling was not the problem. India volume came to 9.31 million tonnes, inside the range management had guided in July. What shrank was the profit on each tonne: the company said EBITDA per tonne fell from a year earlier, mainly because of higher fuel cost.

A cement kiln burns coal or petroleum coke to turn limestone into clinker, and the company tracks what it pays for each thousand kilocalories of heat. In May it guided a rise of about a tenth for the quarter before; the cost came in at ₹1.95. In July management said the cost had almost peaked, provided nothing untoward happened in the Gulf war. Last quarter the company paid ₹2.90, about half as much again as the quarter before and well above the year-earlier level.

The company said the quarter was also hurt by the conflict in West Asia and a weak monsoon. On fuel, it said it had cut petroleum coke, because its price rose, to about 11% of the mix from about 66% a year earlier, and burned mostly imported coal instead. The July view came with an explicit condition about the war. Whatever the cause, the expectation did not hold: management had said the cost might go up by only ₹0.02 or ₹0.03 from ₹1.95, and it rose by about half instead.

Below the operating line the cushion thinned as well. Other income fell from a year earlier, while depreciation and interest rose. Together they more than cancelled the small rise in operating profit, which is how a quarter of strong sales ended with lower pre-tax profit.

Where the extra tonnes went matters too. Trade sales, through dealers to people building homes, were 70% of volume a year ago and had not recovered by the quarter before; last quarter the company put the share at about 61%. On those figures, by our calculation, roughly nine in ten of the added tonnes went to projects and institutional buyers. Management said it is bidding for national infrastructure work and that the price gap between the two channels is narrowing, while India realisation per tonne barely moved.

For the current quarter the company guided fuel at ₹2.15 to ₹2.20, based on purchases already ordered. That is about a quarter below last quarter's cost but still above the level management said in July was close to the peak. Yet it also said total cost this quarter should not be very different from last quarter's, and closed by saying that "we should be able to come up with a reasonably better, if not similar numbers on performance as we did in quarter 2." The yardstick is now public: operating profit near last quarter's ₹1,016 crore, against ₹947 crore in the same quarter a year earlier.