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ICICI Securities Report
Shree Cement Ltd.'s volume focus in Q1 FY25 was exceptional given it stood flat QoQ (up 8% YoY) as against 5-20% drop reported by industry majors. However, implied gain in market share came at the cost of margin, which slipped ~700 basis points QoQ (flat YoY).
As blended realisation plunged more than 6% QoQ while cost/tonne rose 2.6%, Ebitda at Rs 9.2 billion (down 2% YoY; 31% QoQ) stood 18% below estimates.
Calibrating for management's guidance of a weak Q2/Q3 FY25, we chop FY25/26E Ebitda by 21%/11%. Continued weakness in cement prices poses a risk to our revised estimates even as Shree Cement appeared optimistic on recovery H2 FY25 onwards.
Keeping faith, we continue to value Shree Cement at 16 times FY26E Enterprise value/Ebitda and maintain Hold with a revised target price of Rs 24,184 (versus Rs 27,085 earlier).
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