Buy Shree Cements; target of Rs 3970: Prabhudas Lilladher

“Shree Cements, cement revenue grew ahead of our expectation at Rs12.8bn (PLe: Rs12.5), up 40% YoY and 8% QoQ. Realisations grew 11.8% YoY (6.7% QoQ or Rs240/t) at Rs3806 (PLe: Rs3703). Volumes grew 25% at 3.37m tonnes, in-line-with our estimates. Cost/t declined 1.8% YoY at Rs2480 (PLe: Rs2500) on the back of lower pet coke cost and higher volumes. Led by higher realisations and lower pet coke cost, EBITDA in cement beat our expectation with growth of 89% YoY (13% QoQ) at Rs4.47bn (PLe: Rs4.07bn). EBITDA/t grew 51% YoY (16% QoQ) at Rs1326 (PLe: Rs1203).”

“Despite lower than expected volumes (390 v/s PLe:450 MUs), power biz beat our expectations with EBITDA at Rs345m (PLe:270m) on the back of higher realisations (Rs4.45 v/s PLe: Rs4.3) and lower cost of generation (Rs3.55 v/s PLe:Rs3.7). PAT grew to Rs3.52bn (PLe:Rs1.5bn) against Rs605m and Rs1.17bn in Q4FY11 and Q3FY12 respectively due to 49% YoY and 65% QoQ decline in depreciation at Rs818m (PLe: Rs2.3bn).”

“Shree cement reported Q4FY12 earnings; ahead of our expectation on the back of better than expected cement realisations and lower pet-coke cost. Strong cash flow generation, consistent capacity addition (20mtpa by Q2CY14 from current 13.5mtpa) and comfort on valuations continue to drive our positive outlook on the stock. We upgrade the stock to buy with revised TP of Rs3970, 6.5x FY14,” says Prabhudas Lilladher research report.

FIIs holding more than 30% in Indian cos

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