ICICI Securities research report on Shree Cement
Shree Cement (SRCM) has yet again posted a strong performance in Q3FY24. EBITDA stood 18% ahead of estimates (surging 74% YoY/42% QoQ). Notably, cement EBITDA/t at INR 1,348 stood the highest in the industry, riding on the benefits of: 1) ~11% volume jump (up 8% QoQ); 2) blended realisations rising ~2% QoQ; 3) freight cost/t slipping ~6% QoQ; and 4) easing fuel cost. While the cost benefits (both freight and energy) appear sustainable, the odds of industry demand likely to trend weak in the near-term (impact of elections) and a muted cement price outlook (given elevated competitive intensity) offer little scope to increase our earnings estimates.
Outlook
We continue to value SRCM at a rich 17x EV/EBITDA (highest in our coverage) and rolling valuations to Q4FY26E, maintain HOLD with a revised target price of INR 29,489 (INR 27,177 earlier).
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