Shree Cement (SCRM)s 1QFY21 result was relatively weaker than large-cap peers (UTCEM, Ambuja) as EBITDA/t declined to INR1421/t v/s sharp While we keep our estimates largely unchanged, we see challenges related to near-term margins for SRCM. Depreciation expense declined 33% YoY to INR2.7b, driving the beat on PAT While SRCMs home market of northern India remains better placed (due to consolidated market structure and lower capacity additions), its increasing exposure to the eastern region is expected to result in blended margin decline. A strong balance sheet (~INR33b net cash at FY20-end) and limited capex provide comfort in the current uncertain demand environment on account We value SCRM at 16x FY22E EV/EBITDA and add the value of the UAE operations at USD70/t to arrive at TP of INR21,500. market of northern India continues to be better placed (owing to a consolidated market structure and lower capacity additions), its increasing exposure to the eastern region would likely result in decline in blended margin.