Centrum Broking maintains 'buy' on Shree Cement

Shree Cement
cmp: Rs 820
target price: Rs 1,004

Centrum Broking has maintained its ���buy��� rating on Shree Cement with a price target of Rs 1,004, as it feels the stock is undervalued. ���We believe the stock still remains undervalued, which is not evident due to conservative accounting policy adopted by the company,��� the broking house said in a report. Centrum said the company changed its accounting policy to charge depreciation on fixed assets (other than plant and machinery) to the written-down value method in 2004-05 and on plant and machinery in 2006-07.

���Higher depreciation has made the company report lower profit and BV (book value). As per our reworked financial statements, Shree Cement���s FY10E and FY11E EPS would be 53% and 82% higher than reported number, respectively. Similarly, BV/share would be higher by 57% and 64%, respectively,��� it added.