Motilal Oswal has given Neutral recommendation for Shree Cement with a target price of Rs. 21,510 in its research report issued on Oct 15, 2022
Motilal Oswal’s research report on Shree Cement
SRCM, as expected, reported a weak 2QFY23, led by higher variable costs and weak realization. EBITDA fell 42% YoY to INR5.2b (est. INR5.4b) and EBITDA/t came in at a 28-quarter low at INR701 (est. INR770), down 51% YoY and 36% QoQ). Profit fell 67% YoY to INR1.9b (est. INR2.1b). Changes in the Board composition: 1) Mr. B. G. Bangur will be Chairman Emeritus (earlier: Chairman); 2) Mr. H. M. Bangur will be Chairman (earlier: MD); 3) Mr. Prashant Bangur will be Vice Chairman (earlier: Joint MD); and 4) Mr. Neeraj Akhoury (former MD & CEO of ACEM/ACC) has been designated as MD for a period of five years. We have kept our earnings estimates largely intact. Valuations, at 17.7x FY24E EV/EBITDA, appears rich considering the narrowing of cost benefits v/s its peers. We maintain our Neutral rating on the stock, valuing it at 16x Sep’24E EV/EBITDA (from Mar’24 earlier).
Outlook
The stock trades at 17.7x FY24E EV/EBITDA (v/s its 10-year average one-year forward EV/EBITDA of 18x), which restrict any material upside. We maintain our Neutral rating and value it at 16x Sep’24E EV/EBITDA (v/s Mar’24 earlier) to arrive at our TP of INR21,510.
More Info
At 17:30 Shree Cements was quoting at Rs 21,162.90, up Rs 105.30, or 0.50 percent.
It has touched an intraday high of Rs 21,500.00 and an intraday low of Rs 20,984.95.
It was trading with volumes of 1,010 shares, compared to its thirty day average of 3,999 shares, a decrease of -74.74 percent.
In the previous trading session, the share closed up 0.25 percent or Rs 53.10 at Rs 21,057.60.
The share touched its 52-week high Rs 29,825.00 and 52-week low Rs 17,900.00 on 09 November, 2021 and 20 June, 2022, respectively.
Currently, it is trading 29.04 percent below its 52-week high and 18.23 percent above its 52-week low.
Market capitalisation stands at Rs 76,357.33 crore.