Q3FY21 Result Update - Shree Cement - ICICI Direct

Shree Cement reported healthy EBITDA growth of 28.2% YoY to Rs. 1089 crore driven by improved sales volume (up 14.6% YoY to 7.16 MT) and lower production costs. This, along with fall in the depreciation charge led to PAT growth of over 102% for the quarter. The company aims to double its total capacity over the next seven years. Current total cement capacity is at 44.4MT (including UAE), which will increase to 50 MT by end of FY21 with commissioning of 6 MT cement capacity at Odisha and Maharashtra. The company also recently announced 3.5-4 MT clinker capacity expansion entailing capex of ~Rs. 1000 crore at Raipur. It is likely to get commissioned by September 2022E. With expected sharp pick-up in infra and real estate, we expect the growth momentum to remain strong and expect revenue CAGR and PAT CAGR of 12.8% and 19.9%, respectively, during FY20-23E.

Valuation & Outlook

We expect the company to continue its leadership on the costs that would, in turn, help it to consistently gain the market share with improved profitability and return matrix. Thus, it remains long term structural play. Hence, we maintain our BUY rating on the company with a revised TP of Rs. 31,000/share (20x FY23E EV/EBITDA) (earlier TP Rs. 28,000).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_ShreeCement_Q3FY21.pdf

Shares of SHREE CEMENT LTD. was last trading in BSE at Rs.26300 as compared to the previous close of Rs. 24479.05. The total number of shares traded during the day was 4021 in over 2397 trades.

The stock hit an intraday high of Rs. 26646.8 and intraday low of 24500. The net turnover during the day was Rs. 104225517.

Source : Equity Bulls

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