Shree Cement’s (SRCM) Q3 results were in line with estimates. Ebitda fell 14% YoY, but was up 35% QoQ to Rs7.1bn. Volume growth was in line with estimates; however, miss in realization was offset by lower costs (fall in petcoke prices). Ebitda/t was up 26% QoQ to Rs881. Management said that capacity expansions and sustaining cost leadership are amongst its focus areas, and reiterated its capacity target of 80mt by 2030. SRCM announced an interim dividend of Rs45/share.
SRCM reiterated its target to reach 80mt capacity by 2030. On completion of the announced projects, company’s capacity would increase to 56mt by FY25. For the incremental capacity additions, management shared that it has requisite limestone to grow organically through a mix of brownfield and greenfield expansions. SRCM also highlighted its strategy to improve profitability through: i) Setting up plants to improve AFR usage to 15% by FY24 vs 3% seen in FY22. ii) Focus on brand building and increasing share of premium products to 15% (Q3:7%). iii) Increasing rail despatches (Q3: 12%). iv) Increasing green power share (Q3:53%) by adding 45MW of WHRS and 42MW of solar capacity.
Shree has always traded at a premium to peers, given its cost leadership. However, as other players are now catching up, the valuation gap is narrowing. Shree has underperformed the industry in last 1-2 years. At CMP, the stock trades at 19x FY24 EV/Ebitda – analysts’ of IIFL Securities see little scope for further re-rating hereon.
Analysts’ of IIFL Securities maintain reduce with target price of Rs 22,800.
Related Tags
IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000
IIFL Securities Support WhatsApp Number
+91 9892691696
Download The App Now
Follow us on
2024, IIFL Securities Ltd. All Rights Reserved
www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.
