Shree Cement Volume Growth Likely To Peak In Monsoon, Says Chairperson
Shree Cement will continue to invest in its capex at a CAGR of 15% in the next four years.
Shree Cement Ltd.'s net profit in the March quarter of financial year 2024 beat analysts' estimates on better-than-expected revenue realisation and the company is now expecting a revenue growth of 15% going forward.
The cement producer's consolidated net profit grew 29% to Rs 676 crore in the quarter ended March. Shree Cement's volume came in line with Morgan Stanley's expectation but beat its profit estimates on the back of blended realisation, which includes revenue from power. The company is yet to reveal how much revenue it earned from the power segment, it said in a note.
"We can expect a volume growth of 9–10%," Chairperson Hari Mohan Bangur said in an interview to NDTV Profit.
"Normally, cement prices in the year are expected to rise by 4–5%, a little less than the inflation. If volume grows by 10% and price grows by 5%, the expected revenue growth will be 15%. But it all depends on price," he said.
Volume growth is expected to peak in the monsoon months as reduction in heat will accelerate cement consumption. Shree Cement will continue to invest in its capital expenditure at a compound annual growth rate of 15% in the next four years, according to Bangur.
Shree Cement Q4 FY24 Highlights (Consolidated, YoY)
Revenue up 6.5% to Rs 5,433 crore vs Rs 5,100 crore, (Bloomberg estimate: Rs 5,147 crore)
Ebitda up 60% to Rs 1,422 crore vs Rs 889 crore, (Estimate: Rs 1,212 crore)
Margin expands to 26.2% vs 17.4% (Estimate: 23.6%)
Net profit up 29% to Rs 676 crore vs Rs 525 crore (Estimate: Rs 592 crore)
Brokerages On Shree Cement
Jefferies
Jefferies maintains a 'hold' on Shree Cement at a target price of Rs 29,500 apiece, implying a potential upside of 13% from the previous close.
Q4 Ebitda beat estimates by 17%.
Industry-leading Ebitda per tonne of Rs 1,390.
FY24 capex at Rs 2,800 crore.
Green power mix at 55.9% vs 51.1%
To commission 12-million-tonne-per-annum capacity in FY25.
Downside risks are weaker-than-expected demand pickup due to slow macro recovery and sharp rise in input prices, driving costs higher, not completely translating into higher realisations.
Morgan Stanley
Morgan Stanley maintains 'overweight' on Shree Cement at Rs 30,000 target, implying a potential upside of 15%.
Volumes in line, better realisations drove revenue beat.
Awaits data on power sales, which look accelerated during Q4.
Opex per tonne stood 3% lower.
Standalone Ebitda per tonne at Rs 1,392 per tonne.
Nomura
Nomura maintains 'buy' on Shree Cement at Rs 33,400 target price, implying a potential upside of 28%.
Better-than-expected realisation in Q4 drove a strong beat.
Q4 Ebitda beat brokerage estimates by 18%.
Expects Q4 revenue of Rs 440 crore from merchant power sales.
Company could achieve 80 MT cement capacity by 2028.
On the NSE, Shree Cement's stock rose as much as 3.07% during the day to Rs 26,824.85 apiece, the highest since Feb. 19. It erased gains to trade 0.86% down at Rs 25,800 per share, compared to a 0.06% decline in the benchmark Nifty at 12:14 p.m.
The share price has risen 2.52% in the last 12 months but fallen 9.96% on a year-to-date basis. The total traded volume so far in the day stood at 3.34 times its 30-day average. The relative strength index was at 57.49.
Out of 43 analysts tracking the company, 16 have a 'buy' rating on the stock, as many recommend 'hold' and 11 suggest 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 9.1%.
