The Hindu Business Line : Northern market keeps Shree Cement share steady

According to industry analysts, the northern region is expected to grow by 8 per cent in the next one year, while the western region is projected to see 5.5 per cent growth.

According to a senior company official, the market share of the company is 10.5 per cent in the northern region and its plant located in Rajasthan is running at a capacity of around 115 per cent.

The 2.6-million-tpa plant is among the lowest cost cement producers in the country. A new unit with a capacity of 1.2 million tonne per annum would go on stream from September this year.

Existing plant's 100 per cent captive power plant gives it a significant cost advantage over the grid power. Cost savings for the plant per unit are estimated to be Rs 2.60.

According to analysts, this would increase the market share for Shree Cement, as there is no other fresh capacity expansion on the horizon in the northern region.

Mr Deepak Jain, an analyst with Anagram Stockbroking, says that the long gestation period for setting up a cement plant or capacity expansion would provide enough opportunity for Shree Cement to maintain it hold in the region, which is facing a supply-demand mismatch.

According to him, "the operating margins are expected to rise by 300 basis points during the current fiscal owing to cost rationalisation".

At today's closing price of Rs 326, the stock traded at 15.6 times 2004-05 estimated earnings per share of Rs 20.8.

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