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Accumulate Shree Cement; target of Rs 22,888: KR Choksey

KR Choksey recommended accumulate rating on Shree Cement with a target price of Rs 22,888 in its research report dated July 29, 2022.

July 30, 2022 / 10:45 PM IST
 
 
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KR Choksey's research report on Shree Cement


In Q1FY23, Shree Cement’s revenue grew 21.5% YoY/1.2% QoQ to INR 44,149 mn, surpassing our estimate by 8.5%. Cement sales volume for the quarter stood at 7.5 MT, exhibiting a growth of 8.9% YoY, though sequentially volume declined by 7.2%. EBITDA has seen a drop of 21.7% YoY/12.8% QoQ to INR 8,008 mn. EBITDA margin suffered contraction to the tune of 1000 bps YoY and 291 bps QoQ to 18.1%. The drop in EBITDA was due to steep rise in power and fuel costs, which grew by 112.4% YoY/19.5% QoQ to INR 15,137 mn for the quarter. Reported PAT has seen a decline of 55.6% YoY/57.5% QoQ to INR 2,795 mn. PAT margin contracted by 1100 bps YoY/873 bps QoQ to 6.3%. Other than fall in EBITDA, which had impacted the decline in PAT, lower other income for the quarter also contributed to the steep fall in PAT.


Outlook


At CMP of INR 20,415, the stock is trading at FY23E/FY24E EV/EBITDA of 16.7x/14.1x. After factoring in a mixed performance for the quarter, we have lowered our target multiple and now value the stock at 14.5x (vs 16x earlier) its FY24E EV/EBITDA, which yields a target price of INR 22,888 (previous TP of INR 25,085), giving an upside potential of 12.3% from the CMP. Accordingly, we maintain our “ACCUMULATE” rating on the shares of Shree Cement.


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Shree Cement - 290722 - kr

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first published: Jul 30, 2022 10:43 pm
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