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Reliance Securities
Shree Cement (Buy)
CMP: ₹16,629
Target: ₹17,200
Shree Cement’s Limited is a cement company. The company’s principal products/services are cement and clinker. The Company operates through two business segments: cement and power. The company’s manufacturing operations are spread over North and East India across approximately six States. It has a cement production capacity of approximately 25.6 million tonnes per annum. The company has operations in Rajasthan, Uttarakhand, Bihar, Haryana, Chhattisgarh and Uttar Pradesh.
Shree Cement appears to attracting investors attention recently on the expectation of healthy traction ahead due to better realisations and favourable market mix.
Our channel check suggests that average Northern realisation improved by about 1.9 per cent q-o-q QTD in 3QFY19, which bodes well for Shree Cement.
We believe that the company has been moving in the right direction in its pursuit to dominate the markets by adding capacity at regular intervals, which we think will help Shree Cement to grow market share with strong profitability without much stress on balance sheet.
Recent commissioning of new capacities and near-completion of Karnataka clinker units are likely to aid the firm to gain further traction, going forward.
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