Shree Cement margin falls to 17.24% as costs outpace sales
Revenue grew +23.85% YoY, but lower other income and slower cost absorption weakened earnings quality.
Filed 23 Oct 2026, 12:10 IST · Shree Cement Ltd (SHREECEM)
Key takeaways
- Consolidated operating margin fell 3.22 percentage points year on year to 17.24% as expenses grew 28.86% against revenue growth of 23.85%.
- Revenue rose 23.85% year on year to Rs 5,896.51 cr, but net profit fell 14.96% to Rs 263.46 cr, with other income contributing 30.63% of pre-tax profit.
- Sequentially, operating margin declined 3.17 percentage points to 17.24%, extending the fall from 20.41% in Q1FY27.
Price around the results
Revenue growth did not reach earnings
Shree Cement's consolidated revenue increased 23.85% year on year, but operating profit rose only 4.34% because expenses grew faster at 28.86%. Sequentially, revenue fell 5.40% and operating profit dropped 20.12%, indicating weaker operating momentum in Q2FY27. Net profit declined 14.96% year on year and 50.40% quarter on quarter.
Lower other income added to the profit decline
Other income fell 37.14% year on year and 46.88% sequentially, accounting for 30.63% of pre-tax profit in the quarter. That made reported profit quality weaker, particularly as interest expense rose 14.14% year on year and depreciation increased 5.24%. The tax rate was 28.26%, only 0.29 percentage points below last year, so tax relief did not materially offset the pressure on pre-tax profit.
Margin has now fallen for two straight quarters
Operating margin declined from 22.68% in Q4FY26 to 20.41% in Q1FY27 and 17.24% in Q2FY27, making this the second consecutive quarterly decline. The current margin is still 1.27 percentage points above the 15.97% median for the 15 Commodities-sector peers that have reported the same quarter. Year on year, the margin fell 3.22 percentage points as expenses outpaced revenue.
Past result reactions have usually been positive
The stock rose after five of its last eight results, while the median absolute move was 2.48%. That history points to a generally positive but moderate reaction pattern, although it does not indicate the market's response to this quarter.
Q2FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹5,897 cr | ₹6,233 cr | -5.40% | +23.85% |
| Other income | ₹112 cr | ₹212 cr | -46.88% | -37.14% |
| Expenses | ₹4,880 cr | ₹4,961 cr | -1.63% | +28.86% |
| Operating profit | ₹1,016 cr | ₹1,272 cr | -20.12% | +4.34% |
| Operating margin (%) | 17.24% | 20.41% | — | — |
| Interest | ₹59 cr | ₹57 cr | +3.18% | +14.14% |
| Depreciation | ₹703 cr | ₹686 cr | +2.46% | +5.24% |
| Profit before tax | ₹367 cr | ₹741 cr | -50.45% | -15.31% |
| Tax | ₹104 cr | ₹210 cr | -50.57% | -16.17% |
| Net profit | ₹263 cr | ₹531 cr | -50.40% | -14.96% |
| EPS (₹) | ₹72.56 | ₹146.67 | -50.53% | -15.13% |
Operating margin of 17.24% compares with a Commodities sector median of 15.97% across 15 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +3.54% | +2.86% |
Volume on the results session was 0.56× its 20-day average.
What to watch
- Whether operating margin recovers from 17.24% after two consecutive quarterly declines.
- Whether expenses continue to grow faster than revenue after the 28.86% versus 23.85% year-on-year gap.
- Whether other income's 30.63% contribution to pre-tax profit reduces in the next quarter.