Shree Cement jumps 6% to 52-week high as Q3 net doubles, keeps brokerages upbeat

Shree Cement stock has rallied 25 percent in the last one year, outperforming benchmark Nifty 50.

Shares of Shree Cement jumped over 6 percent to hit a fresh 52-week high of Rs 30,344.95 on the NSE on February 1, a day after the company reported robust earnings for the quarter ended December 2023.

Its consolidated net profit jumped two-fold to Rs 701.85 crore, and revenue from operations grew 21.5 percent on-year to Rs 5,223.18 crore during the quarter under review.

Analysts remain bullish on the stock, given its capex plans and strong growth delivery. Shree Cement's ambitious capex plan will help deliver sustained volume growth and allow it to maintain cost leadership in the cement industry, said Nuvama Institutional Equities.

The company is the most efficient cement player, given its cost-competitiveness (both operating and capex), historic high RoE versus peers and strong balance sheet with net cash position, the brokerage noted.

At 9:43am, Shree Cement shares were trading 5.49 percent higher at Rs 30,125 on the National Stock Exchange (NSE).

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Morgan Stanley has issued an 'equal-weight' call on Shree Cement with the target price set at Rs 28,500 per share. The company's recent performance showcased much-improved volumes, possibly driven by market share gains in the eastern region, it noted.

This increase in volumes, coupled with efficient operational expenditure, contributed to a noteworthy EBITDA beat. Shree Cement anticipates a continued strong outlook for volume growth, particularly with a rising share of premium products in its portfolio.

According to analysts at Choice Broking, the anticipation of increased spending by the central government in preparation for the 2024 general elections is projected to provide an additional impetus to cement demand in the current financial year.

"We expect the company's revenue and EBITDA to record a CAGR of 22.9 percent and 28.9 percent over FY23-FY26," the brokerage firm said as it upgraded the stock to 'add' with a target price of Rs 30,920.

Motilal Oswal in its report said the Shree Cement stock trades at 19x/17x FY25/FY26 EV/EBITDA, which appears rich. "We maintain our 'neutral' rating and value the stock at 16x FY26 EV/EBITDA to arrive at our revised target price of Rs 27,700, up from 27,000 earlier," it said.

Also read | Shree Cement Q3 net profit rises two-fold to Rs 701.85 crore

Nuvama Institutional Equities has also upgraded the stock to 'hold' with a target price of Rs 29,495. A sharp increase in cement demand/prices may lead to earnings upgrade, the brokerage said. Additionally, a sharp decline in cost, any large acquisition at an attractive valuation may trigger an upside.

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