Hold Shree Cement; target of Rs 24,300: ICICI Direct

ICICI Direct's research report on Shree Cement

Shree is the third largest cement group in India with domestic cement capacity of 46.4 MT as of FY22. In the past four years, it has diversified itself from a 100% north player to a player with capacities now in Rajasthan, Uttarakhand, Bihar, Chhattisgarh, Haryana, Uttar Pradesh, Karnataka and Odisha. It also has a presence in UAE with integrated cement capacity of 4 MT and 3.3 MT clinker (located near port in Ras-Al-Khaimah) • Proximity to end user market, use of split grinding units and power capacity of 742MW (Including 211MW WHRS) makes it most efficient player in the industry.

Outlook

With expected revenue CAGR of 14% and RoIC of 18%, we remain positive on the company. However, we maintain HOLD due to rich valuations. We value Shree at Rs 24,300 i.e.19x FY24E EV/EBITDA.

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