Buy Shree Cement; target of Rs 33,000: Emkay Global Financial

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26 Aug, 2025 12:21

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Shree Cement (SRCM) reported standalone EBITDA (adjusted) at Rs8.75bn (up 48% YoY, albeit down 29% QoQ), which came in ~10% below our estimate. In contrast to its weak YoY volume growth (-8%) in Q1FY26, SRCM reported ~4% growth in Q2FY26 which is in line with the industry growth estimate. Cement realization was broadly flat sequentially, while blended realization was down ~1.5% QoQ (down by ~Rs80/t). A decent showing on the volume and realization fronts was offset by inflation in unit (RM+P&F) costs, which were up 8%/5% YoY/QoQ. Consequently, overall EBITDA/t stood at Rs1,105 vs ~Rs780 YoY and ~Rs1,375 QoQ. On the expansion front, SRCM is steadfast in achieving >80mtpa in the medium term. Regarding near-term milestones, it aims to reach ~69/75mtpa by FY26/27-end, respectively. Further, SRCM’s overseas subsidiary Union Cement Company (UCC), UAE has recently announced plans to increase cement capacity by 3mtpa with investment of AED110mn (~Rs2.6bn). Building in the higher costs in Q2, we cut FY26E/27E/28E EBITDA by 8-12%.

We continue to value SRCM at 19x EV/EBITDA on Q2FY28E (rolling forward basis), while we cut our TP by 6.5% to Rs33,000 (from 35,300); maintain BUY.

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