MOSL: SHREE CEMENT (Downgrade to Neutral)-Capacity overhang in key operating regions to pressurize prices
SHREE CEMENT: Capacity overhang in key operating regions to pressurize prices, Downgrade to Neutral
(SRCM IN, Mkt Cap USD10b, CMP INR20248, TP INR21000, 4% Upside, Downgrade to Neutral)
- 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. Adj. PAT was up 5% YoY to INR3.6b (our estimate: INR2.5b).
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.
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