Accumulate Shree Cement; target of Rs 25,575: KR Choksey

KR Choksey's research report on Shree Cement

Shree Cement’s Q2FY25 result missed our projections despite revenue in line with our estimates. Revenue declined to INR 40,542 Mn, down 15.1% YoY (-20.9% QoQ) due to weaker realization and a decline in volumes. EBITDA declined by 30.8% YoY (-33.8% QoQ) to INR 6,135 Mn, missing our estimates, primarily due to higher-than-expected operating expenses. EBITDA margin stood at 15.1% (-343bps YoY/-296bps QoQ). PAT declined by 82.9% YoY to INR 764 Mn because of weak operating performance partially offset by tax benefits. PAT margin contracted to 1.9%, down 747bps YoY (-355bps QoQ). We lower our FY26E EBITDA to INR 53,951 Mn (previously: INR 54,594), reflecting weaker Q2FY25 performance.

Outlook

However, we retain FY26E EV/EBITDA multiple of 16.5x, underscoring our confidence in the company’s expansion plan to reach its 80MTPA target by FY28E, which remains on schedule supported by the optimism of improving macro conditions. Accordingly, we reduce our target price to INR 25,575 (previously: INR 26,083) and retain our “ACCUMULATE” rating.

For all recommendations report, click here