Neutral Shree Cement; target of Rs 27,700 : Motilal Oswal

Motilal Oswal's research report on Shree Cement

Shree Cement’s (SRCM) 3QFY24 EBITDA grew 74% YoY to INR12b (~9% above our estimate). Blended EBITDA/t stood at INR1,388 (est. INR1,290). OPM surged 7.8pp YoY to 25%. Adjusted PAT grew 165% YoY to INR7.3b (~32% above our estimate). The management highlighted that it has revamped its brand strategy and has launched ‘Bangur’ as the master brand for all product categories across markets. It has also streamlined premium offerings, with only one premium product ‘Bangur Magna’. The company’s objective is to enhance consumer pull in the market and increase its premium product business.

Outlook

We raise EBITDA estimates by 3% for FY25/FY26 each, considering higher volumes. The stock is currently trading at 19x/17x FY25E/FY26E EV/EBITDA. We value SRCM at 16x FY26E EV/EBITDA to arrive at a revised TP of INR27,700 (earlier INR27,000) and maintain Neutral rating on the stock.