Shree Cement Execution on track ::Emkay

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Shree Cement

Execution on track

ACCUMULATE

CMP: Rs1,641                                        Target Price: Rs2,050

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n     300 MW power plant (150MW X 2) at Rajasthan execution on track. 1st Unit (150MW) already under trial runs - 2nd unit expected to be synchronized by Oct-11

n     Shree enters into short term contracts for sale of 225MW of power with SEBs @Rs4.35/unit for H2FY12.  Management believes petcoke prices to stabilize with commissioning of IOC, Koyali and HPCL, Bhatinda plants 

n     Significant land acquisition completed for Karnataka & Chhatisgarh Greenfield Cement plants - capacity to touch 20 mnt by FY16

n     Headwinds for Shree yet to recede-However see resumption of EBIDTA growth from H2FY12 onwards. Valuation at 5.4X EV/E  & EV/t of USD85 remain inexpensive-ACCUMULATE