Sharekhan is bullish on Shree Cement has recommended buy rating on the stock with a target price of Rs 22,500 in its research report dated October 22, 2019.
Sharekhan's research report on Shree Cement
We upgrade Shree Cement to Buy with a revised PT of Rs. 22,500, owing to upward revision in net earnings estimates along with favourable demand and pricing environment in its key northern region of operations. During Q2FY2019, Shree Cement reported better-than-expected standalone net profit, led by strong cement realisation growth along with a decline in operating cost structure. The power division’s performance was, however, disappointing. Shree Cement targets 46MTPA capacity by FY2021 end and 60MTPA in four years from 40MTPA currently. The company would be raising Rs. 3,000 crore through QIP over a year’s time to fund its capacity expansion plans.
Outlook
We increase our net earnings estimate for FY2020-FY2021, factoring higher realisation and lower opex, leading to upward revision in our PT to Rs. 22,500.
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