Accumulate Shree Cement; target of Rs 26,083: KR Choksey

KR Choksey's research report on Shree Cement

Shree Cement’s Q1FY25 result missed our projections despite revenue in line with our estimates. Despite falling cement prices, revenue increased 1.8% YoY (-5.1% QoQ) to INR 51,240 Mn led by strong volume growth. EBITDA declined 1.9% YoY to INR 9,272 Mn; missing our estimate, primarily due to higher-than-expected operating expenses. EBITDA margin stood at 18.1% (-67bps YoY/-823bps QoQ). PAT declined 51.3% YoY to INR 2,786 Mn, missing our expectations because of weak operating performance and higher depreciation partially offset by lower tax rates. PAT margin contracted to 5.4%, down 593bps YoY (-706bps QoQ).

Outlook

We lower our multiple to 16.5x (previously: 17.5x) and reduce our FY26E EBITDA to INR 54,594 (previously: INR 61,089), reflecting the weaker Q1FY25 results, declined realization, and weaker demand. Accordingly, we reduce our target price to INR 26,083 (previously: INR 30,662) and downgrade our rating to “ACCUMULATE” from “BUY” on Shree Cement Ltd.