Keshav Cement's Clear Path to Stronger Returns

Ashwin Thakker

— 2 min read

Key Facts on Outlook:

  • FY26 Revenue Growth: Targeted 42% Year-on-Year volume growth in cement sales.
  • FY26 EBITDA Target: INR 55-60 crores, with an anticipated margin of 25-30%.
  • FY27 EBITDA Target: Expected to exceed INR 100 crores at 65-70% cement capacity utilization.
  • Cement Capacity Utilization: Targeting 45% in FY26, escalating to 55-60% in FY27, and 70% in FY28.
  • Debt Repayment: Highest liability of INR 25.8 crores in FY26, with a reduction to INR 20-21 crores in FY27.
  • Solar Business: Realization stable at INR 5.9-6.0 per unit for FY26, with future expansion considered.
  • New Ventures: Ready Mix Concrete (RMC) plant initiation delayed to Q2/Q3 FY26 for stabilization.

Shri Keshav Cements and Infra Limited began FY26 on a robust note, reporting a 32.53% year-on-year surge in total income to INR 41.4 crores in Q1. This performance, coupled with a significant 74% increase in profit after tax, highlights the company's strategic focus on operational efficiency and market expansion. The recent earnings call illuminated the management's forward-looking guidance, detailing plans for capacity ramp-up, margin improvement, and strategic diversification into related segments.

Cementing Future Growth

The company's new kiln, commissioned in March 2025, is central to its growth trajectory. While Q1 FY26 saw a 36% capacity utilization, the management targets a significant ramp-up to 45% for the full FY26, and further to 55-60% in FY27, aiming for 70% by FY28. This expansion is designed to enhance profitability, as evidenced by the Q1 EBITDA per ton reaching INR 365, a substantial improvement from less than INR 100 last year. The company expects this figure to align with Southern regional peers (around INR 560) within a couple of quarters. Despite some initial stabilization challenges, the company is confident in achieving full operational capacity by the end of Q2 FY26. For the full year, the company projects an EBITDA of INR 55-60 crores, a revised figure from earlier higher estimates, reflecting a cautious yet firm outlook on capacity utilization and market dynamics. The focus remains on aggressive sales and marketing to capture market share, with a notable 42% year-on-year volume growth in Q1, outperforming the South Indian average.

Diversifying for Sustainable Returns

Beyond cement, Shri Keshav Cements' solar power segment remains a significant contributor to its financial strength. With a 40-megawatt capacity, solar contributed INR 7.8 crores to Q1 EBITDA, outperforming cement's INR 3.2 crores. The company expects solar realizations to stabilize between INR 5.9 and INR 6.0 per unit throughout FY26. As cement production ramps up, more solar energy will be utilized for captive consumption, enhancing overall cement EBITDA. Additionally, the company is progressing with its Ready Mix Concrete (RMC) plant, with land already acquired. While delayed to Q2 or Q3 FY26 for cement plant stabilization, the RMC venture is seen as a strategic advantage, offering higher net realizations by eliminating middlemen and directly serving customers, potentially increasing overall top-line revenue and absolute EBITDA. The company is also on track with its debt management, with INR 25.8 crores in repayments due in FY26, the highest for existing debt, set to decrease in subsequent years, largely via internal accruals.

Shri Keshav Cements is setting a clear course for sustained growth, leveraging its expanded cement capacity and stable solar operations. The strategic focus on operational efficiency, market penetration, and judicious diversification into RMC positions the company for improved profitability and debt reduction in the coming years. Investors can anticipate a diligent and controlled execution of these plans, reinforcing the company’s strong financial foundation.

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