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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.
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