February 10, 2017 / 13:25 IST
Shree Cement is engaged in the manufacturing of cement and generation of power having operations mainly in North and East India. It has an installed cement capacity of more than 27 million tonnes per annum (MTPA) and power capacity of more than 600 megawatt (MW).
Outlook
We expect revenue/PAT CAGR of 22%/26% over FY17-FY19E. We factor cement sales volume CAGR of 15% over FY17-19E. Given its cost-efficient business model, expected market share gains through capacity expansion and anticipation of higher realisation (given its significant exposure to the northern region), we believe the long-term story is intact. Hence, we upgrade the rating to BUY from REDUCE with a revised TP of Rs 17,567 (based on 16x FY19E EV/EBITDA).
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