Accumulate Shree Cement; target of Rs 27,821: KR Choksey

KR Choksey's research report on Shree Cement

In Q4FY23, Shree Cement’s revenue grew 17% on YoY basis to INR 47,850 mn and on a QoQ basis improved by 17.59% from INR 40,690 mn. The company reported Volumes growth for the quarter of 10% YoY to 8.83 MTPA. EBITDA for Q4FY23 came at INR 8,892 mn as against INR 7,267 mn in Q3FY23, registering a growth of 22.36% and on a YoY basis declined by 3.22% from INR 9188 mn. EBITDA margin stood at 17.43% in Q4FY23, registering an improvement of 53 bps sequentially and a decline by 362 bps on a YoY basis. EBITDA/ton fell 11% YoY, but was up 15% QoQ to Rs1,011/t. Q4FY23 capacity utilisations were improved to 78% vs 69% QoQ and 71% YoY. Company has declared second interim dividend of INR 55 per share FY23. Total dividend for FY23 stands out to INR 100 per share.

Outlook

At CMP 24,848, the stock is trading at FY25E EV/EBITDA multiple of 18.5x. We continue to value the stock at EV/EBITDA multiple of 21x on FY25E estimates, which yield TP of INR 27,821,giving an upside potential of 12%.

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