MOSL: SHREE CEMENT (Buy)-Slowing capacity addition to drive utilization improvement
​SHREE CEMENT: Slowing capacity addition to drive utilization improvement
(SRCM IN, Mkt Cap USD9.6b, CMP INR18,800, TP INR22,360, 19% Upside, Buy)
We hosted Mr H M Bangur, MD and CEO of Shree Cement (SRCM), as part of 'CEO Track' at our annual conference. Key takeaways:
- ​Capacity addition will likely slow down from 5% over FY12-17 to sub-2% in the next five years. This, coupled with stable demand, should drive utilization improvement in the next 3-4 years.
- Per capita cement consumption in India continues to be among the lowest in the world, the improvement in which could drive structural growth in India's cement industry.
- Limestone reserves in India are scarce and can support demand only for the next 6-7 years before getting fully utilized.
- Import of cement does not pose a major threat for India due to the relatively cheap price of delivered cement.
- The company is likely to report growth at 1.5-2x that of industry average, led by capacity addition ahead of industry.
- SRCM will continue enjoying cost efficiency due to its capability to put up cement plants at 30-40% lower cost than industry. Hence, it will not bid for any expensive acquisition.
- Given its relatively healthy balance sheet, the company is likely to reward investors with a dividend payout
Shree Cements is engaged in the manufacture of cement. Co.'s brands include Shree Ultra, Bangur Cement, and Rockstrong Cement. Shree Ultra is Co.'s flagship brand. This brand has two variants, Shree Ultra OPC and Shree Ultra Jung Rodhak Cement. Shree Ultra Jung Rodhak Cement has unique rust prevention properties. Bangur Cement, launched as a premium brand in the market, is designed to meet the high end market segment. Rockstrong Cement is the youngest brand. This brand has high performance and ability to withstand exceptionally harsh environment conditions.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.