Accumulate Shree Cement; target of Rs 30,619: KR Choksey

KR Choksey's research report on Shree Cement

Shree Cement’s Q3FY25 performance missed our projections. Revenue declined to INR 45,727 Mn, down 12.0% YoY (+12.8% QoQ). The QoQ growth was driven by robust volume expansion partially offset by decline in realization. EBITDA declined by 23.7% YoY (+57.3%QoQ) to INR 9,648 Mn; EBITDA margin stood at 21.1% (-324bps YoY/+597bps QoQ). PAT declined by 72.4% YoY (+153.0%)to INR 1,934 Mn. PAT margin stood at 4.2% (-929bps YoY/+234bps QoQ). We maintain our FY26E/FY27E EBITDA of INR 53,961 Mn/ 59,124 Mn, reflecting improved cement pricing across India, which are expected to drive higher realization and EBITDA/Ton in the upcoming quarters.

Outlook

We roll over our valuation to FY27E and assign an EV/EBITDA multiple of 19.0x, to arrive at a target price of INR 30,619 (previously: INR 25,635) underscoring our confidence in the SRCM’s capacity expansion strategy, targeting 80.0 MTPA by FY28E, and is further supported by anticipated improvements in government spending that will positively impact cement demand. Accordingly, we maintain our “ACCUMULATE” rating on the shares of Shree Cement Ltd.

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