Shree Cement: Treading Smoothly On The Growth Path
Shree Cement: Treading Smoothly On The Growth Path
Shree Cement: Treading Smoothly On The Growth Path
Shree Cement
Treading smoothly on the growth path
Feb-20
Jun-19
Oct-19
Capacity expansion plan to reach 60MT in four years on track: Shree Cement’s standalone installed capacity
stands at 40.4MTPA as of December 2019. The company will be further adding 3MT Odisha grinding unit (at
a cost of Rs. 423 crore, expected to commission in H2FY2020) and 3MT Maharashtra grinding unit (at a cost
of Rs. 525 crore in Q3FY2021), which is expected to take its standalone capacity to 46.4MTPA by FY2021 end.
Management plans to increase Shree Cement’s capacity to 60MT in four years, both through the inorganic
as well as organic growth. Consequently, Shree Cement has raised Rs. 2,400 crore through QIP, allotting 12.4
lakh shares at a price of Rs. 19,300 on November 23, 2019. The continuous expansion plan is likely to aid in
reporting at least double-digit volume growth during FY2020-FY2021.
Financials (Standalone) Rs cr
Particulars Q3FY2020 Q3FY2019 YoY % Q2FY2020 QoQ %
Net Sales 2848.3 2780.6 2.4 2801.7 1.7
Total Expenditure 1999.0 2090.6 -4.4 1957.6 2.1
Operating profits 849.3 690.1 23.1 844.2 0.6
Other Income 64.9 55.3 17.4 57.8 12.5
EBIDTA 914.3 745.4 22.7 901.9 1.4
Interest 74.1 59.3 25.0 71.7 3.3
PBDT 840.1 686.1 22.5 830.2 1.2
Depreciation 432.2 336.1 28.6 428.3 0.9
PBT 407.9 350.0 16.6 401.8 1.5
Tax 98.0 68.7 42.7 92.8 5.6
Extraordinary items 0.0 -20.0 - 0.0 -
Reported Profit After Tax 310.0 301.3 2.9 309.1 0.3
Adjusted PAT 310.0 281.3 10.2 309.1 0.3
Margins
OPM 29.8% 24.8% 500 30.1% (31)
PAT 10.9% 10.1% 77 11.0% (15)
Tax rate 24.0% 19.6% 440 23.1% 93
Source: Company; Sharekhan Research
30
25
20
15
10
0
Sep-02
Sep-04
Sep-06
Sep-08
Sep-10
Sep-12
Sep-14
Feb-16
Feb-18
Feb-20
Jun-15
Jun-17
Jun-19
May-03
May-05
May-07
May-09
May-11
May-13
Dec-01
Oct-16
Oct-18
Apr-01
Jan-04
Jan-06
Jan-08
Jan-10
Jan-12
Jan-14
1yr fwd EV/EBITDA Peak 1yr fwd EV/EBITDA Trough 1yr fwd EV/EBITDA Avg 1yr fwd EV/EBITDA
Peer Comparison
P/E (x) EV/EBITDA (x) P/BV (x) RoE (%)
Particulars
FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E
Shree Cement 61.5 52.0 22.6 20.2 6.6 7.1 12.4 13.1
UltraTech Cement 33.5 29.7 15.3 13.5 4.1 3.6 12.9 12.9
The Ramco Cement 32.4 27.3 18.3 15.9 3.8 3.3 12.2 13.0
JK Lakshmi Cement 15.5 14.2 6.9 6.6 2.2 1.9 15.4 14.6
India Cements 14.9 11.5 5.9 5.4 0.4 0.4 2.9 3.6
Source: Company, Sharekhan research
Investment theme
The expansion plan of Shree Cement to reach 60MTPA over the next four years (currently 40.4MTPA) along
with increasing its geographical footprint in the eastern and southern regions is likely to aid in better volume
growth going ahead. The company’s focus to increase share of trade sales and premium products should
help improve realisation. Further, benign cost environment should improve upon its operational profitability,
leading to healthy net earnings growth over FY2019-FY2022E.
Key Risks
Slowdown in cement demand especially north, east and south affects overall volume growth for the
company.
Increased pet coke price and diesel price affect profitability.
Decline in cement prices especially in its region of operations affects profitability.
Additional Data
Key management personnel
Mr. Benu Gopal Bangur Chairman
Shri H. M. Bangur Managing Director
Shri Prashant Bangur Joint Managing Director
Subhash Jajoo Chief Finance Officer
Source: Company Website
Top 10 shareholders
Sr. No. Holder Name Holding (%)
1 Shree Capital Services Ltd 25.79
2 Digvijay Finlease Ltd 12.16
3 FLT LTD 10.33
4 Mannakrishna Investments Pvt Ltd 5.86
5 Newa Investments Pvt Ltd 3.95
6 Ragini Finance Ltd 3.64
7 Didu Investments Pvt Ltd 3.36
8 NBI Industrial Finance Co Ltd 2.44
9 PineBridge Investments LP 1.54
10 SBI Funds Management Pvt Ltd 1.41
Source: Bloomberg
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