Shree Cements Ltd. share price target

We maintain our BUY rating on the stock.

Shree Cement’s (SRCM) Q4FY24 EBITDA/t, at INR 1,347, has yet again stood at the highest level among peers.

Q3 revenue growth of 20% YoY backed by sharp 11% volume uptick to 8.9mt

Recommendation: We roll over our estimate to FY26 and change our rating from HOLD to BUY on the back of strong operating performance.

Shree Cement's revenue for Q2FY24 was INR 48,002 Mn, up 18.9% YoY driven by increase in production and sales volume. Cement realization increased ~1.0% YoY and 2.0% QoQ to INR 4,843 per ton. EBITDA increased by 63.2% YoY in Q2FY24, and Net Income increased by 143.6% YoY.

With an upbeat Q2FY24 performance, Shree Cement (SRCM) has reclaimed its industry supremacy. While reported EBITDA stood just 2% ahead of estimates, a closer look brings forth the following positives for its core cement business – a) ~2% QoQ uptick in realisation (vs it being flat for major peers) and b) ~3% QoQ rise in EBITDA/t (vs QoQ dip for other large peers).

Q2 volume growth of 10% YoY could have been higher but for a pursuit of realisation gains (+10%)