Shree Cement Q3 Results Review - Beats Expectations; Upgrade To Hold: Systematix

Systematix Report

Shree Cement Ltd.'s Q3 FY24 revenue was in line with our estimate while Ebitda/profit after tax was 20%/24% was ahead of our expectations led by easing power and fuel costs. Standalone revenue rose 20.4% YoY to Rs 49.0 billion (plus 6.9% QoQ) on the back of robust volume growth of 23.5% YoY to 8.9 mmt.

Blended realisation/tonne declined 2.4% YoY and 1.4% QoQ. Ebitda stood at Rs 12.3 billion (plus 74.3% YoY, 41.8% QoQ) versus our estimate of Rs 10.3 billion. Profit after tax more than doubled to Rs 7.3 billion (plus 165.3% YoY, plus 49.4% QoQ) versus our estimate of Rs 5.9 billion. Blended Ebitda/tonne stood at Rs 1,388, up 41.2% YoY and 30.8% QoQ.

Shree Cement share of green power in total power consumption stood at 58%, the best among its peers. Plant and fuel costs/tonne witnessed a much-needed reduction and fell sharply to Rs 1,393/tonne (-23.0% YoY, -16.6% QoQ). Lead distance decreased to 448 kms versus (472 kms in Q2) aiding lower freight costs.

The share of blended cement remains consistent at 72%. Trade: Non-Trade mix constant at 76:24. We roll over our estimates to FY26E and expect a revenue/Ebitda/profit after tax compound annual growth rate of 13%/23%/31% during FY23-FY26E led by healthy volume growth, capacity expansion and cost leadership.

We raise our target price to Rs 28,845 from earlier Rs 21,505 based on enteprise value/Ebitda multiple of 18.0 times.

We upgrade the stock to Hold.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.