Shree Cement — Earnings Growth, Superior Profitability Priced In, Says Motilal Oswal Maintaining 'Neutral'

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Motilal Oswal Report

Shree Cement Ltd. is among the least-cost cement producers in the industry, supported by:

1. a higher share of green power (waste heat recovery system, solar, and wind power), which meets 55%+ of its power requirements;

2. higher alternative raw material consumption; and

3. lower specific power consumption (68Kwh/t of cement).

However, we believe its cost leadership and operational efficiency benefits are already factored into current valuations. Additionally, low capacity utilization, limited regional diversification into newer capacity addition, and rising industry supply (expect ~50mtpa capacity addition in FY26) may constrain any capacityled re-rating in the stock.

The stock trades at 22x/18x FY26E/FY27E EV/Ebitda (versus its 10-year average one-year forward EV/Ebitda of 20x). We reiterate our Neutral rating and value Shree Cement at 17 times FY27E EV/Ebitda to arrive at our target price of Rs 27,000.

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