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Target: ₹20,000
CMP: ₹19,563.30
Shree Cement (SRCM) commissioned 3 mtpa grinding unit (GU) at Pune, Maharashtra, in February 2022 and 4 mtpa (12,000 tpd) clinker plant at Baloda Bazar, Chhattisgarh, in March. With these expansions, SRCM’s domestic clinker/cement capacity increased 15 per cent/7 per cent to 29.6 mtpa/46.4mtpa, respectively, as of Mach. It aims to reach to 80-mtpa cement capacity by FY30.
The management continues to focus on cost optimisation through reduction in clinker factor, power consumption, increase in green energy share, routes rationalisation, augmenting use of technological tools in supply management and building rail connectivity.
The company’s cash conversion cycle increased (50 days in FY22 v/s 34 days in FY21), mainly due to higher fuel and work-in-progress (clinker) inventories.
SRCM has a net cash balance of ₹6,700 crore in FY22 (v/s ₹6,400 crore in FY21). We believe that it will continue to maintain strong liquidity and a deleveraged balance sheet with focus on utilising operating cash flows. We forecast its net cash to be at ₹6,700 crore in FY24.
Dividend payout as a percentage of net profits stood at 14 per cent in FY22 v/s 9 per cent in FY21 (last five-year average was 21 per cent).
Going forward, we expect SRCM’s volume to grow 8 per cent/9 per cent year-on-year in FY23/24, respectively.
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