Buy Shree Cement; target of Rs 34,000: Sharekhan

Sharekhan's research report on Shree Cement

In Q3FY2024, the company reported a strong operational beat led by lower-than-expected opex/tonne, mainly owing to lower P&F and freight costs. Management retained 12% y-o-y volume growth guidance for FY2024 and targets ~15% y-o-y volume growth for FY2025. For Q4, it is expected to benefit from higher utilisations and a lower operating cost structure. Capacity expansion plans remain on track to reach 56 MTPA and 75 MTPA by FY2024 and FY2027, respectively. It would incur Rs. 12,500 crore capex over the next three years.

Outlook

We upgrade Shree Cement to Buy with a revised PT of Rs. 34,000, rolling forward our valuation multiple to FY2026E earnings and factoring upwardly revised estimates.