Shree Cement – Positive Impact Of Lower Commodity Prices With Higher Demand, Realisation In H2: Axis Securities


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Shree Cement Ltd. is setting up an Integrated cement plant at Gothra, Nawalgarh (Rajasthan) having a clinker capacity of 3.8 million tonnes per annum and cement capacity of 3.5 mtpa. Capex of Rs~3,500 crore is earmarked for this project and the financing will be done through internal accruals and debt. The plant is likely to get operational by Q4 FY24.

Shree Cement indicated that cost headwinds to moderate moving ahead as coal and pet coke prices have softened and positive impact of the same will be reflected in Q4 FY23. Margins in Q3 FY23 will see a slight improvement over Q2 FY23. We expect the Ebitda margins to improve to 23% -24% in FY24E-25E on the back of higher realisation, lower cost and better demand.

The cement demand is expected to be robust, growing at 8% compound annual growth rate over FY22-FY25E moving ahead and new capacity addition by various large players in the East region will easliy get absorbed as per management.

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