Shree Cement reported strong Q2FY20 results surpassing ours as well as consensus estimates by wide margin. The key driver for this strong beat was better than expected pricing in its key North market. The company reported sales/EBITDA of Rs28bn/Rs8.4bn, up 8.5% and 11% above our estimates respectively. Sales volume at 5.7mn was up 1% YoY against our expectation of a 6% decline. Realisations were flat QoQ (despite having ~30% exposure to East where price correction was severe) against our 3% decline estimate. Total operating costs per tonne declined sharply by 2% QoQ and 7% YoY driven by lower RM costs and other expenses. Aggregate EBITDA/mt at...

We retain NEUTRAL rating with an SOTP based TP of Rs 20,000 (Standalone cement/power biz at 15/5x Sep-21E EBITDA and Gulf assets at 1x BV). The stock currently trades at 14.7/13.5x FY21/22E EBITDA and EV of USD 200/MT. Despite ascribing premium valuation to the cement biz for its industry leading growth andreturn ratios, the stock price offers a limited upside. We retain NEUTRAL on Shree Cement (SRCM) with TP of Rs 20,000. Our TP implies cement EV of USD 215/MT.

Shree Cement posted better-than-expected standalone net profit for Q2FY2020 at Rs. 309 crore (up 10% y-o-y on adjusted Q2FY2019 PAT). Net earnings were boosted by better-than-expected operational performance, aided by 9% y-o-y rise in cement realisation and 3.7% y-o-y decline in cement opex. Consequently, cement EBITDA/tonne grew by 54% y-o-y to Rs. 1,452. The power division posted a 64% y-o-y decline in EBITDA/unit at Rs. 0.36, led by 9% and 15% decline in volume and realisation, respectively. Strong operating leverage led to a 10% y-o-y...

Completely defying the realisation challenges witnessed in 2QFY20, Shree Cement (SRCM) has reported a super performance in 2QFY20. While EBITDA zoomed by a stellar 62% YoY (-6% QoQ) to Rs8.4bn (vs. our estimate of Rs6.7bn), cement EBITDA/tonne stood at strong Rs1,451 (Rs314 higher than our estimate) as against Rs946 in 2QFY19 and Rs1,443 in 1QFY20. Higher than expected EBITDA/tonne is attributable to: (a) Rs100 lower opex/tonne than estimated; and (b) Rs213/tonne higher realisation than estimated. Sales volume remained soft as per expectations at 5.72mnT (+1.5% QoQ and -5.5% QoQ), while average cement realisation improved by 9% YoY (-1.1% QoQ) to Rs4,356/tonne despite having significant presence in Eastern region. Cement...

21 October 2019 Volumes grew by a muted ~1.5% YoY to 5.72mt. Realization was up ~9% YoY (-1% QoQ) to INR4,654/t (our line), power revenue was down 22% YoY to INR1.4b (26% miss). As a result, total revenue of INR28b (+8% YoY) came in line with our estimate. Total cost/t of INR3,201/t (-2% YoY/QoQ) was below our estimate of INR3,277/t due to lower freight cost (down 8% QoQ to INR1,013/t). Cement EBITDA/t thus came in 16% above our estimate at INR1,453/t (+46% YoY) and the highest in the last 10 years. Power EBITDA, however, was weaker than expected at INR130m (- 68% YoY, -54% QoQ) due to lower realized tariff. Tax rate stood at 23% for the quarter. Adj. PAT was up 36% YoY to equity raise of up to INR30b (5% dilution at CMP). Performance was strong with revenue/EBITDA/PAT up 3%/40%/33% YoY to INR58b/INR17.5b/INR6.

Shree cement limited provides building materials. The company manufactures and sells cement and cement products in India. The company currently operates with a total cement capacity of 41.9mpta of which 37.9mtpa is located in India. Total power capacity for the company stood at...

Shree Cement's (SRCM) 1QFY20 results were below our expectation but in-line with consensus. SRCM reported EBITDA of Rs9.02bn, up 57% YoY, largely driven by sharp uptick in realizations and controlled costs. The company reported sales/PAT of Rs30.4bn/Rs3.63bn, -1%/30% YoY. Volumes at 6.1 mn mt declined sharply by 13.3% YoY. Considering the additional volumes from the Karnataka plant, which were not present in 1QFY19, the decline in volume from its North and East markets must have been ~20% YoY. SRCM had mentioned during the last conference call that the company will focus on pricing and not on volumes. The change in strategy might have resulted in lower volumes but the...

Capacity additions on track; double digit growth to continue Over FY14-19, Shree Cement has grown at 12.7% CAGR. Going ahead also, the company has expansion plans slated with 5.5 MT capacity getting commissioned in FY20E. The Jharkhand grinding unit (2.5 MT) was commissioned in June 2019 while the Odisha grinding unit is expected to get commissioned by September 2019. Additionally, the board has also approved construction of a grinding unit in Pune for ~| 525 crore and is expected to come into service in FY21E. Hence, we believe the growth...

Reprises industry trend of lower volumes, higher realizations: Volumes including clinker declined ~13.3% YoY to 6.1mt (our estimate: 6.0mt). Realizations were up ~14.5% YoY to INR4,703, while revenues declined 1% YoY to INR30.3b (our estimate: INR29b). Cement revenue stood at INR28b (1% YoY) and Power revenue at INR1.9b (-6% YoY). Total cost/t increased 1% YoY in the quarter. With power EBITDA at INR280m, cement EBITDA/t stood at INR1,443 (+67% YoY). As a result, EBITDA increased 40% YoY to INR9b (our estimate: INR7.5b), with the margin at 29.7% (+9pp YoY). Tax rate stood at 25% v/s 10% in the year-ago period....

Shree Cement (SRCM) has reported a stellar operating performance in 1QFY20 with EBITDA surging by a sharp 57% YoY to Rs9bn (vs. our estimate of Rs8.3bn) mainly led by higher-thanestimated recovery in average cement realisation. EBITDA/tonne came in at multi-year high of Rs1,443 as against Rs863 and Rs1,103 in 1QFY19 and 4QFY19, respectively. While average cement realisation recovered by strong 14.5% YoY and 11.3% QoQ to Rs4,703, cement operating cost/tonne stood at Rs3,260 (+0.5% YoY and +4.4% QoQ). On the flip side, sales volume (including clinker of 0.23mnT) was subdued, as it declined by 13% YoY and 17% QoQ to 6.06mn.T SRCM commenced commercial production at Seraikela (Jharkhand) GU on 26th Jun'19 having capacity of 2.5mnT, while 3mnT Cuttack SGU (capex of Rs4.25bn) is to be commissioned in...

SRCM currently trades at 15.6x FY21E EBITDA and EV of USD 229/MT. Despite ascribing premium multiples 15x FY21 EBITDA for its industry leading growth, cost and profitability leadership along with low capex requirements, the stock looks fully valued. Retain NEUTRAL. We retain NEUTRAL rating on Shree Cement (SRCM) with SoTP based TP of Rs 19,200 (Cement/power businesses at 15/5x FY21E EBITDA, and UAE subsidiary at 1x BV). Our TP implies cement EV of USD 215/MT.

Shree Cement's Q4FY19 results were in line with our expectations with EBITDA of Rs8.5bn, up 35% YoY, largely driven by lower operating costs and healthy volumes. The company reported sales/PAT of Rs32.8bn/Rs3.2bn. Lower than expected PAT is on account of higher depreciation related to the new clinker line at Karnataka and lower than expected other income. Total operating costs per tonne declined by 4% QoQ and 2% YoY. Volume at 7.3mnMT is up 14% YoY compared to our expectation of 12% growth. Aggregate EBITDA/mt at Rs1,161 is up 18% YoY. We have tweaked our FY20 estimates and introduce FY21 numbers. We have also moved our valuation forward to...

Shree Cement's (SRCM) revenue growth of ~17% YoY in 4QFY19 at Rs32.8bn was largely in line with our estimate. The performance was driven by volume growth (13% YoY jump including clinker sales) from eastern and northern regions and realisation gain of ~ 1.9% YoY backed by all its key markets. SRCM has tactically shifted its focus to realisation gain over volume push in FY19. Further, costs remained flat YoY (marginal decline) driven by raw material and logistic cost savings. Overall EBITDA grew ~37% to Rs8.5bn driven by the strong power segment's performance compared with cement segment. EBITDA margin grew 240bps YoY to 25.8% compared with 22.4% in 4QFY18. The power segment's performance was steady with ~10% YoY jump in external power sales to ~380mn units and power revenues jumped...

We estimate SRCM's margins to firm up to ~Rs 1,200/MT during FY20-21 (from Rs 1,000/MT in FY19), while it continues to deliver industry leading 10%+ volume CAGR. Lean capital employed further ensures sustenance of healthy return ratios. We retain NEUTRAL rating with SOTP based TP of Rs 19,040, as robust outlook is priced in. We retain NEUTRAL rating with TP of Rs 19,040 (SOTP based: Cement/power businesses at 15/5x FY21 EBITDA, and its UAE subsidiary - Union Cement - at 1x acquisition cost). Our TP implies cement EV/MT of USD 213/MT.

Easing cost pressures drive margins: Total cost/t declined 2% YoY. Power EBITDA at INR430m, resulted in cement EBITDA/t growing 15% YoY to INR1,103/t). Thus, EBITDA was up 35% at INR8.5b (in-line). Overall, margins were up 3.4pp YoY at 25.8%. Tax rate stood at 20% in 4QFY19 v/s 13% in 4QFY18, thus, reported PAT declined 20% YoY to INR3.2b (our est. INR3.5b). Key highlights: (1) Company has announced a cement grinding unit of 3mt at a capex of INR5.2b in Pune; it should get commissioned by Sep'20. (2) 4QFY19 average fuel cost has decreased to INR8,670/t from INR8,900/t in...

cement prices have improved by 2.6% q-o-q (up 2.4% y-o-y) for Q4FY2019. Southern India outperformed other regions with 8.7% q-o-q rise (up 4.9% y-o-y). Northern region (predominant market for Shree Cement) has seen 2.1% q-o-q rise (up 2.8% y-o-y). The uptick in cement prices in Southern India bodes well for Shree Cement, which commissioned 3MT clinker capacity at...

Shree Cement's (SRCM) revenue growth of ~21% YoY in 3QFY19 at Rs27.8bn was largely in line with our estimate. The performance was driven by volume (11% YoY jump including clinker sales) from eastern and northern regions and realisation gain of ~4.0% YoY backed by northern region. However, costs escalated ~8.4% YoY driven by higher fuel costs and other expenses. Overall EBITDA grew ~21% to Rs6.9bn driven by the strong power segment's performance. EBITDA margin was flat at 24.8% compared with 3QFY18. The power segment's performance was strong with ~67% YoY jump in external power sales at ~446mn units and power revenues jumped 44% to Rs5.02bn. Reported PAT at Rs2.81bn was impacted because of higher depreciation provision of Rs3.36bn (Rs2.1bn in 3QFY18) and higher interest expenses of Rs593mn...

Shree Cement's Q3FY19 results were better than our as well as consensus expectations, largely driven by lower other expense. The company reported sales/EBITDA of Rs27.8bn/Rs7.1bn which is 1.8%/20% higher than our estimate. While most cost items were in line with our expectations, other expenses were lower on account of forex gain of Rs200mn vs forex loss of Rs800mn last quarter. Adjusted for the same, EBITDA beat is in lower single digit. Volume at 5.93mnMT is up 11.3% YoY compared to our expectation of 10% growth. Aggregate EBITDA/mt at Rs1,197 is up 12% YoY. We maintain our FY19/20 estimates. We expect Shree Cement's EBITDA/ net profit to...

Shree Cement reported a good set of Q3FY19 numbers. Revenues increased 20.8% YoY to | 2781 crore (vs. I-direct estimate: | 2721 crore) mainly led by 16.7% YoY growth in cement segment to | 2559 crore. Further power segment revenues witnessed a two-fold jump YoY to | 221 crore led by 63.4% YoY growth in power volumes at 446.2 million units with realisations up ~32% YoY to | 4.96/unit On the margin front, blended EBITDA margins increased 80 bps YoY to 25.5% mainly led by 4.7% YoY & 1.1% QoQ increase in cement...

Shree cement (SRCM) reported Q3FY19 earnings ahead of our expectation on Change in Estimates | Target | Reco the back of lower other expenses. EBITDA/t rose 6% YoY to Rs1,067 above our estimate of Rs1,015. Led by strong organic growth (15% CAGR in capacity...