Neutral Shree Cement; target of Rs 25060: Motilal Oswal

Moneycontrol • 6 days ago

Original source

Key Investment Pillars

  • Volume growth: Shree Cement's 2QFY27 volume growth was ~18% YoY, driven by robust demand and improved capacity utilization.
  • Cost optimization: The company is taking internal cost-control measures, including reducing lead distances and increasing the share of alternative fuels and green power, to partly offset the impact of elevated fuel prices.
  • Premium products mix: The company is focusing on increasing its premium products mix, which typically command a premium of INR25-35/bag over base products.
  • Capacity expansion: Shree Cement aims to achieve its 80mtpa capacity target in the short term, with the commissioning of a 3mtpa cement mill in the UAE.

Thesis Validation Checklist

  • Volume growth: Monitor the company's ability to sustain volume growth in the next 12 months.
  • Cost optimization: Track the company's progress in reducing costs and improving profitability.
  • Premium products mix: Watch for an increase in the premium products mix and its impact on realizations.
  • Capacity utilization: Monitor the company's capacity utilization rates and its ability to achieve its capacity expansion targets.