Hold Shree Cement; target of Rs 23,453: Sharekhan

Sharekhan's research repor on Shree Cement

In Q1FY2021, operational profitability disappointed led by lower-than-expected realisation. Net earnings beat estimates was led by higher other income and lower depreciation. Expanded capacity as on FY2021E and expected decline in volume would utilise ~50% of the capacity providing enough headroom for volume growth. Shree Cement is yet to announce revival of new capacity expansion plans post recent fund-raising of Rs. 2,400 crore.

Outlook

We retain our Hold rating on Shree Cement Limited (Shree Cement) with a revised PT of Rs. 23,453, due to rich valuation and factoring a downward revision in earnings estimates for FY2021-FY2022E.

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