Shree Cements Limited - Power packed performance - 4QFY13 Results Review - Antique

Shree Cement Ltd. (SCL) performance in 4QFY13 (year ending June) was below our estimates as the de-growth in cement volumes at 6% was higher than 4.5% estimated by us. Additionally, we had factored in a 2% weakness in cement prices whereas prices declined by 4% to INR3,602/mt. However, the performance of power division positively surprised us at both the volumes as well as profitability front, which resulted in the reported EBIDTA of INR3.8bn missing our estimates by only 6%.

Valuation and outlook

At the CMP of INR4,300, the stock trades at a PE and EV/EBIDTA of 15.9x and 6.4x, discounting its FY15e numbers. SCL's scale of operations coupled with operational efficiencies would enable it to face challenging times and capitalise on cyclical upswings. We reiterate a BUY on the stock with a target price of INR4,887 (earlier target price of INR5,195). We value the cement division at 8x and power division at 4x FY15e EBIDTA.

Source : Equity Bulls

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