Target: ₹24,413
CMP: ₹23,241.80
Shree Cement Q3-FY23 EBITDA came in line with our and consensus estimates. Volume growth of 23 per cent was one of the strongest in the industry, realisations however remained flat q-o-q. Its EBITDA margins at 17.4 per cent have seen an uptick in the quarter post declining for the past seven quarters; the company is undertaking various strategies to further improve EBITDA/t and margins in the next 12/24 months.
The company reiterated its plans to reach 80-mtpa capacity by FY30, of which it has a road map in place for 55 mtpa. It plans to undertake rest through organic expansions and has reassured that they have enough limestone in place to reach this number. . Commissioning of the ongoing capacity additions of about 10 mtpa is to be completed by Q1FY24/ Q4FY24/ Q2FY25 for 3-mtpa GU at West Bengal/ 3.5-mtpa IU in Rajasthan/ 3-mtpa IU in Andhra Pradesh.
Shree Cement’s Q3FY23 revenue increased 15 per cent y-o-y to ₹4,100 crore. On the operational front, volume saw robust growth by 23 per cent y-o-y and realisation was flat q-o-q. . PAT declined 44 per cent led by lower EBITDA, increased D&A, interest costs, partially offset by increase in other income.
. We retain our HOLD rating due to rich valuation with revised target of ₹24,413 (valued at 15x FY25E EV/EBITDA, earlier TP ₹21,489).