Keshav Cement's Bold Outlook: Capacity, Margins, Debt Reduction

Ashwin Thakker

— 3 min read

Key Facts on Outlook:

  • FY'26 EBITDA Guidance: INR 55-60 crores (revised from INR 70-75 crores).
  • FY'26 EBITDA Margin Target: 25-30%.
  • Cement Capacity Utilization Target: 45% in FY'26, 55-60% in FY'27, 70% in FY'28.
  • FY'27 EBITDA Target: Over INR 100 crores with 65-70% utilization.
  • Debt Repayment: INR 25.8 crores in FY'26 (highest liability year), reducing to INR 20-21 crores in FY'27. Total debt reduction of 30-40% (approx. INR 70 crores) in the next three years.
  • Future Capex: No new cement capacity planned until existing plant stabilizes; plan to add 30MW solar capacity; RMC plant development paused until cement plant stabilizes.

Shri Keshav Cements & Infra Ltd. reported a robust 32.53% year-on-year growth in total income for Q1 FY'26, signaling a positive start to the fiscal year. This strong performance underpins the company's confident forward-looking guidance. Management detailed strategies for enhanced capacity utilization, improved profitability, and significant debt reduction. Their focus on stabilizing recent expansions and exploring green energy and RMC opportunities paves the way for sustained future growth.

Optimizing Capacity and Boosting Margins

Shri Keshav Cements & Infra Ltd. is focused on leveraging its recently commissioned kiln to drive profitability. For Q1 FY'26, the company reported a total income of INR 41.4 crores, with EBITDA reaching INR 10.41 crores, achieving a margin of 25.5%. This performance reflects benefits from capacity expansion and cost control. The company expects to increase its cement capacity utilization from 36% in Q1 FY'26 to approximately 45% for the full FY'26, further rising to 55-60% in FY'27, and aiming for 70% in FY'28. This ramp-up is projected to significantly enhance EBITDA per ton, from over INR 365 in Q1 FY'26, eventually targeting levels closer to the southern industry average of INR 560.

"we are targeting around 45% this year and then slowly wrap it up to about 60% -- 55% to 60% next year and around 70% in the following year."

The company revised its FY'26 EBITDA guidance to INR 55-60 crores, down from an earlier projection of INR 70-75 crores, primarily due to initial ramp-up challenges with the new kiln. Despite this, management anticipates EBITDA margins for FY'26 to be in the range of 25-30%. Looking ahead, with 65-70% production levels in FY'27, the company is confident in achieving over INR 100 crores in EBITDA. The solar power segment continues to provide a stable, low-cost energy backbone for their operations, with pricing expected to remain consistent between INR 5.9 and INR 6 per unit throughout the year, contributing significantly to overall EBITDA.

Strengthening Balance Sheet and Diversifying Portfolio

A key focus for Shri Keshav Cements & Infra Ltd. is strengthening its financial position through debt reduction. The company anticipates FY'26 to be its highest debt repayment year, with approximately INR 25.8 crores in liabilities. However, three term loans, initially valued at around INR 62 crores, are slated for closure this fiscal year. This will lead to a significant decrease in repayment liabilities, projected to reduce to INR 20-21 crores in FY'27 and less than INR 15 crores from FY'28 onwards. The management expressed confidence in repaying these loans primarily through internal accruals, with a target of reducing total debt by 30-40% (approximately INR 70 crores) over the next three years.

"Based on the current strategy for the existing debt, the debt will reduce to almost -- about 30% to 40% of debt will be repaid in the next 3 years or approximately you can say around INR70 crores of debt will be repaid in the next 3 years."

Regarding future capital expenditure, the company has no immediate plans for new cement capacity additions, preferring to stabilize the existing plant first, especially given the overcapacity in the South market. However, there are strategic plans to expand the solar capacity by an additional 30 megawatts, supplementing the current 40 megawatts, once the cement plant achieves stability. The much-anticipated Ready-Mix Concrete (RMC) plant project, for which land has already been acquired, has seen a slight delay, expected to commence work by the end of Q2 or Q3 FY'26, after the cement plant's stabilization issues are fully resolved. This venture is expected to enhance net realization by reaching customers directly and offering better margins compared to direct cement sales.

Shri Keshav Cements & Infra Ltd. is on a clear growth trajectory, focusing on maximizing efficiency from its expanded cement capacity and strategically reducing debt. While facing initial ramp-up challenges and a revised EBITDA outlook for FY'26, the long-term vision remains robust, supported by stable solar contributions and potential RMC expansion. The company is well-positioned to capitalize on infrastructure spending and housing demand in its core markets, promising a stronger financial footing in the coming years.

Read more