Buy Shree Digvijay Cement Company; target of Rs 76: Arihant Capital

Arihant Capital's research report on Shree Digvijay Cement Company

Shree Digvijay Cement Company Limited (SDCCL) delivered robust performance in Q3FY21 both on YoY and QoQ front although the results were below our expectation on all fronts. Net Revenue grew by 17.2% YoY, & 47.9 % QoQ to Rs 1435 mn in Q3FY21, below our expectation of Rs 1640 mn. EBIDTA grew by 32.4 %YoY and 157% QoQ to Rs 270 mn below our expectation of Rs 310 mn, growth in EBIDTA was backed by healthy growth in top line and better operational efficiency. EBIDTA margin expanded by 215 bps YoY and 799 bps QoQ bps to 18.8%. PAT grew by 47% YoY and 444 % QoQ to Rs 141 mn below our estimates of Rs 180 mn mainly due to rise in operating profit and higher other Income. PAT margin expanded 200 bps YoY & 717 bps Q0Q to 9.8%.

Outlook

At CMP of Rs 59, SDCCL is trading at EV/EBIDTA multiple of 7.5(x) to its FY20 EBIDTA of Rs 1009 mn . We are positive on the company owing to phenomenal business recovery in last quarter and as demand for cement continuous to be encouraging going ahead.