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Shree Cement: Operational performance improves QoQ substantially

ICICIdirect Research 16 May 2025 DISCLAIMER

Operational performance improved substantially during the quarter, led by healthy growth in volumes, improvement in cement realisation and controlled cost structure

Volume growth of 3.3% YoY (+12.2% QoQ) was little lower than estimates but cement realisation improvement of 5% QoQ was ahead of expectations as the cement prices improved considerably during the quarter in key north India markets. Also, company remains focused on keeping its profitability better-than-industry through pricing-led sales approach & increase in sale of premium products

EBITDA/ton improved by 30% QoQ to Rs 1404/ton, which is highest in the industry so far during the quarter
Looking ahead, we anticipate that company’s operational performance to improve further over FY26E & FY27E, led by capacity additions, pick-up in demand & prices and continuous focus on cost reduction

The company has already added ~10 mtpa capacity in the last 2 years and further ~6 mtpa expansion is in process, which will take the total capacity to ~69 mtpa by FY26E (from ~63 mtpa at present). Company’s target is to reach 80+ mtpa capacity by FY28E

Over FY25-27E, we estimate ~8% volume CAGR with EBITDA/ton improvement to Rs 1455/ton (from Rs 1070/ton in FY25)

We have a Buy rating on Shree Cement with a target price of Rs 36,700

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