Shree Cement - Impressive Performance, upgrade earnings :Emkay

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Shree Cement

Impressive Performance, upgrade earnings

ACCUMULATE

CMP: Rs 2,025                                       Target Price: Rs 2,400

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n     Shree’s 2QFY12 EBITDA at Rs2.0bn (+41% yoy) significantly ahead of est (Rs1.49bn) led by higher cement realizations (Rs3412/t,+13% yoy).Revenues grow 24% yoy to Rs8.54bn   

n     Better realization & higher share of cement in dispatches (98% vs 92%) help 39% improvement EBIDTA/t to Rs816. Muted power offtake lead to 96% decline in Power EBIDTA 

n     Cement price in North already up 7% vs Q2FY12 avg. Despite factoring higher RM cost & lower power volumes, recent price hikes drive EBITDA upgrade of 8%/5% for  FY12E/13E

n     Shree remains our top pick. Raise TP to Rs2400 driven by earnings upgrade & roll over to FY13. Valuation at 4.4X EV/E & EV/t of USD84 for FY13 remain attractive. ACCUMULATE