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Motilal Oswal Report
Shree Cement Ltd., as expected, reported a weak Q2 FY23, led by higher variable costs and weak realisation.
Shree Cement's Ebitda fell 42% YoY to Rs 5.2 billion (our estimate: Rs 5.4 billion) and Ebitda/tonne came in at a 28-quarter low at Rs 701 (our estimate: Rs 770), down 51% YoY and 36% QoQ). Profit fell 67% YoY to Rs 1.9 billion (our estimate: Rs 2.1 billion).
Changes in the board composition:
Mr. B. G. Bangur will be Chairman Emeritus (earlier: Chairman);
Mr. H. M. Bangur will be Chairman (earlier: Managing Director);
Mr. Prashant Bangur will be Vice Chairman (earlier: Joint MD); and
Mr. Neeraj Akhoury (former MD and CEO of Ambuja Cements Ltd./ACC Ltd.) has been designated as MD for a period of five years.
We have kept our earnings estimates largely intact. Valuations, at 17.7 times FY24E enterprise value/Ebitda, appears rich considering the narrowing of cost benefits versus its peers.
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