Accumulate Shree Cement for Rs 580 target: Prabhudas
Prabhudas Lilladher has reiterateed accumulate rating on Shree Cement Ltd for a target price of Rs 580. Valuation looks attractively placed at the current market price.
By ET Online |
MUMBAI: Prabhudas Lilladher has reiterateed accumulate rating on Shree Cement Ltd for a target price of Rs 580. Valuation looks attractively placed at the current market price.
At the current market price, the stock trades at EV/EBITDA of 2.1times and 2.2 times FY09E and FY10E respectively, while on EV/tonne, it trades at $36 times and $28 times FY09E and FY10E capacity respectively.
SCL's H1FY09 performance reflects hardening pet coke prices and its inability of raising prices in tandem with the rise in input prices, given the slackening demand and excess supply in the market. Prabjudas maintain that existing sector dynamics in the region would dampen the cement prices heavily, beginning from Q4FY09 and at an accelerated pace in FY10 wherein we expect fall of 10% in realisation. However, the softening in pet coke prices in the coming months would provide some comfort on the cost side.
Shree Cement reported pre-exceptional PAT of Rs 115 crore for the quarter in-line with Prabhuda expectations. The company showed phenomenal rise of 35 pre cent in sales volume. However, the rise was partially undone by a fall of 4 per cent in blended realisation, dragging the revenue growth to 32 per cent. Marred by high fuel prices and higher other expenses, EBITDA declined by 9 per cent to Rs 183 crore. Reflecting the impact of softening realisation and high fuel cost, EBITDA per tonne fell by 33 per cent YoY to Rs 906.
Work on SCL's new 1mtpa clinker line (Unit-VII) at Ras unit, along with split grinding unit at Suratgarh is progressing as per the schedule. The whole project is expected to be commissioned by the end of H1FY10. In addition to this, the company is adding waste heat recovery-based power plant of 10MW capacity at Ras with an outlay of Rs 55 crore, and it is expected to be commissioned by end of FY09.
At the current market price, the stock trades at EV/EBITDA of 2.1times and 2.2 times FY09E and FY10E respectively, while on EV/tonne, it trades at $36 times and $28 times FY09E and FY10E capacity respectively.
SCL's H1FY09 performance reflects hardening pet coke prices and its inability of raising prices in tandem with the rise in input prices, given the slackening demand and excess supply in the market. Prabjudas maintain that existing sector dynamics in the region would dampen the cement prices heavily, beginning from Q4FY09 and at an accelerated pace in FY10 wherein we expect fall of 10% in realisation. However, the softening in pet coke prices in the coming months would provide some comfort on the cost side.
Shree Cement reported pre-exceptional PAT of Rs 115 crore for the quarter in-line with Prabhuda expectations. The company showed phenomenal rise of 35 pre cent in sales volume. However, the rise was partially undone by a fall of 4 per cent in blended realisation, dragging the revenue growth to 32 per cent. Marred by high fuel prices and higher other expenses, EBITDA declined by 9 per cent to Rs 183 crore. Reflecting the impact of softening realisation and high fuel cost, EBITDA per tonne fell by 33 per cent YoY to Rs 906.
Work on SCL's new 1mtpa clinker line (Unit-VII) at Ras unit, along with split grinding unit at Suratgarh is progressing as per the schedule. The whole project is expected to be commissioned by the end of H1FY10. In addition to this, the company is adding waste heat recovery-based power plant of 10MW capacity at Ras with an outlay of Rs 55 crore, and it is expected to be commissioned by end of FY09.
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