Buy Shree Cement; target of Rs 31200: ICICI Direct

ICICI Direct's research report on Shree Cement

Shree Cement is the third largest cement group in India with domestic cement capacity of 43.4 MT as of FY21. In the past four years, it has diversified itself from a 100% north player to one with capacities now in Rajasthan, Uttarakhand, Bihar, Chhattisgarh, Haryana, Uttar Pradesh, Karnataka and Odisha. It also has a presence in UAE with integrated cement capacity of 4 MT and 3.3 MT clinker (located near port in Ras-Al-Khaimah) Proximity to end user market, use of split gas and power generation capacity of 742 MW (including 211 MW WHRS) makes it most efficient player in the industry

Outlook

With volume led expected revenue CAGR of 16.5% and expected RoCE of 19%+, we remain positive on company. Hence, we maintain BUY rating We value Shree at Rs 31,200 i.e.20x FY23E EV/EBITDA