Buy Shree Cement; target of Rs 31000: ICICI Direct

ICICI Direct is bullish on Shree Cement has recommended buy rating on the stock with a target price of Rs 31000 in its research report dated February 02, 2021.

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February 05, 2021 / 19:11 IST

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ICICI Direct's research report on Shree Cement

Shree Cement reported healthy EBITDA growth of 28.2% YoY to Rs 1089 crore driven by improved sales volume (up 14.6% YoY to 7.16 MT) and lower production costs. This, along with fall in the depreciation charge led to PAT growth of over 102% for the quarter. The company aims to double its total capacity over the next seven years. Current total cement capacity is at 44.4MT (including UAE), which will increase to 50 MT by end of FY21 with commissioning of 6 MT cement capacity at Odisha and Maharashtra. The company also recently announced 3.5-4 MT clinker capacity expansion entailing capex of ~Rs 1000 crore at Raipur. It is likely to get commissioned by September 2022E. With expected sharp pick-up in infra and real estate, we expect the growth momentum to remain strong and expect revenue CAGR and PAT CAGR of 12.8% and 19.9%, respectively, during FY20-23E

Outlook

We maintain our BUY rating on the company with a revised TP of Rs 31,000/share (20x FY23E EV/EBITDA) (earlier TP Rs 28,000).

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