Buy Shree Cement; target of Rs 35,330: ICICI Securities

ICICI Securities's research report on Shree Cement

Shree Cement’s (SRCM) FY26 playbook, as articulated by Chairman Mr H M Bangur in a recent media interview (Link), seems decisive and leaves little room for ambiguity. Prioritising ‘value over volume’, SRCM has guided: 1) 2–3% volume growth vs. 7–8% estimated for industry; 2) a target EBITDA/t of INR 1,400 – being broadly at par with Q4FY25 (FY25 stood INR 1,070/t). The volume guidance corroborates our channel-check findings viz., SRCM restraining its volume-push and focussing not just on higher pricing, but also on narrowing the gap with larger peers. Further, cash-rich SRCM has hinted at a special reward for shareholders in year 2025 (incidentally marks SRCM’s 40th anniversary since commencing operations). By and large, the company’s stance (value over volume) is in sync with our Dec’24 sector upgrade hypothesis of a pronounced tapering in industry-wide competitive intensity. The improving margin outlook for the sector keeps us as enthused as before; maintain BUY with an unchanged TP of INR 35,330.

Outlook

Hence, our estimates remain unchanged. SRCM’s stance (of value over volume) resonates with our hypothesis around easing competitive intensity driving margin expansion. Given the improving outlook, we continue to value SRCM at 19x FY27E EV/EBITDA and maintain BUY with a TP of INR 35,330.

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