Buy Shree Cement; target of Rs 28,379: Prabhudas Lilladher

Moneycontrol • 6 days ago

Original source

Key Investment Pillars

  • Volume growth: Shree Cement is expected to achieve FY27 volumes of 40-41mt, driven by healthy demand momentum in North and South regions, with a similar run rate expected in H2FY27.
  • Improving realizations: Blended NSR grew 2.3% QoQ led by higher premium share (~28%) and increase in cement prices in the Northen region.
  • Cost optimization: Management expects Q3 costs to remain broadly similar to Q2, with a focus on alternative fuels, logistics, and operational efficiencies to mitigate cost pressures.
  • Capacity expansion: The company's expansion in the UAE and new capacity in Meghalaya are expected to support long-term growth.

Thesis Validation Checklist

  • Volume growth: Watch for Shree Cement's ability to achieve its FY27 volume guidance and outperform industry growth.
  • Realization trends: Monitor cement prices and premium product share to assess the company's ability to maintain or improve its blended NSR.
  • Cost control: Track the company's landed fuel cost and overall cost structure to ensure that cost optimization efforts are effective.
  • Capacity utilization: Monitor the utilization rate of new capacities, particularly in the UAE and Meghalaya, to assess the company's ability to ramp up production and drive growth.