Shree Cement - Energy cost saving help EBIDTA beat, pricing remains weak - Emkay

Reco: HOLD
CMP: Rs 4414
Target Price: Rs 4350

- EBITDA at Rs4.05bn (+9% yoy) above est of Rs3.9bn - lower pet coke prices (down 7% qoq) help drive energy savings driving EBIDTA beat. EBIDTA/t Rs1042 +3.8% yoy, 2.5% qoq

- Weak demand & pricing clearly visible-cement revenues decline 2% yoy. Volumes drop 6.2% yoy while realizations though +4.8% yoy decline 3.7% qoq

- Pricing power remains weak as cement prices continue to slide even in seasonally strong period. Even after factoring in efficiencies, cut FY14E/15E EBITDA by 2.5%/2.8%

- Shree's earnings likely to remain weak led by near term cap constraints & weak prices. Though capacity ramp up plans by H214 provides visibility, valuations at EV/E 8.2X & USD145 EV/t factors in these positives. Downgrade to HOLD.

Source : Equity Bulls

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