Emkay Global Financial has given Buy recommendation for Shree Cements with a target price of Rs. 23,300 in its research report issued on Oct 15, 2022

Emkay Global Financial’s research report on Shree Cements

Shree Cement’s (Shree’s) standalone Q2FY23 EBITDA declined 42% YoY/36% QoQ to Rs5.2bn, logging 14-15% below consensus’ and our estimates, owing to lesser-thanexpected realization led by lower power revenues. Blended EBITDA/ton declined 51% YoY/36% QoQ to Rs701 (Emkay est.: Rs825). The Board has appointed Neeraj Akhoury (erstwhile MD & CEO of Ambuja Cement) as the MD of the company w.e.f. 14-Oct-2022 for five years, subject to approvals from members of the company. Shree has planned growth capex of Rs73bn over the next three years which will be mainly for ongoing projects, such as the 3.5mt/3mt integrated cement plants at Rajasthan/Andhra Pradesh, the 3mt grinding unit at West Bengal, and a 106MW solar power plant. After completion of such projects, the company’s domestic capacity will reach 53mt/56mt by FY24/FY25 vs. 46.4mt currently.


Factoring-in the Q2FY23 miss, we cut our EBITDA by 9% for FY23E, while we marginally trim estimates by 1-2% for FY24-25; we revise our Sep-23 TP to Rs23,300/share (from Rs23,550). Our DCF-based TP implies one-year forward EV/E of 15x. Maintain Buy.

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