Reduce Shree Cement; target of Rs 29,152 Prabhudas Lilladher

Prabhudas Lilladher's research report on Shree Cement

SRCM delivered robust operating performance in Q4FY25 on the back sharp 4.5% QoQ jump in NSR while volumes grew at moderate pace, 3.3% YoY to 9.84mt. SRCM continued to adopt value over volume strategy in FY25 and achieved industry leading EBITDA/t however volume remained flattish. Cement pricing has improved over the last few months and mgmt. expects to deliver better than industry volume growth in FY26 keeping an eye on margins. As most of the headwinds for economy are behind, mgmt. expects cement demand to grow faster over the next two years, leading to higher utilization for SRCM. Trade share and share of premium products is on rise due to the launch of multiple premium eco-friendly brands over the last few quarters. With commissioning of Etah (closer to Agra) grinding unit, mgmt. plans to cater to faster growing central & East UP market. Mgmt. also remained upbeat on strong growth potential from Northern India and plans to cater to J&K, Gujarat & western MP markets with its Pali GU.

Outlook

We tweak our FY26/27E EBITDA estimates by 4%/-1.5% on account of better near-term pricing. The stock is trading at EV of 21.5x/18x FY26E/FY27E EBITDA, which appears full. Maintain ‘Reduce’ rating with revised TP of Rs29,152 (earlier Rs28,336) valuing at 17x EV of Mar’27E EBITDA.

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