Neutral on Shree Cements, target price at Rs 27,700: Motilal Oswal Financial Services

Motilal Oswal Financial Services has neutral call on Shree Cements with a target price of Rs 27700. The current market price of Shree Cements is Rs 26052.8.

Shree Cements, incorporated in the year 1979, is a Large Cap company (having a market cap of Rs 93600.68 crore) operating in Cement sector.

Shree Cements key Products/Revenue Segments include Cement, Power, Clinker, Other Operating Revenue, Scrap, Traded Goods for the year ending 31-Mar-2023.


Financials
For the quarter ended 31-12-2023, the company has reported a Consolidated Total Income of Rs 5370.65 crore, up 8.89 % from last quarter Total Income of Rs 4932.11 crore and up 20.06 % from last year same quarter Total Income of Rs 4473.38 crore. Company has reported net profit after tax of Rs 701.85 crore in latest quarter.

The company's top management includes Mr.H M Bangur, Mr.Prashant Bangur, Mr.Neeraj Akhoury, Mr.Shreekant Somany, Mr.Nitin Dayalji Desai, Mr.Zubair Ahmed, Mr.Sanjiv Krishnaji Shelgikar, Ms.Uma Ghurka. Company has B R Maheshwari & Co. LLP as its auditors. As on 31-12-2023, the company has a total of 4 crore shares outstanding.

Investment Rationale
MOSL cut EBITDA estimates for FY25/26 by 5% (each) due to pricing pressure (allIndia average cement price declined 5-6% QoQ in 4QFY24E). The stock trades at 18x/16x FY25E/FY26E EV/EBITDA (vs. its 10-year average one-year forward EV/EBITDA of 20x). MOSL reiterated Neutral rating and value SRCM at 17x FY26E EV/EBITDA to arrive at our TP of Rs 27,700.

Promoter/FII Holdings
Promoters held 62.55 per cent stake in the company as of 31-Dec-2023, while FIIs owned 12.31 per cent, DIIs 12.37 per cent.