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Shree Cements

Result Update: Shree Cements Revenues for the current quarter Q3FY09 grew by 27% YoY, which was better than our estimates led by better dispatch growth as well as sale of captive power. Operating margins were impacted by high power and fuel and transportation expenses.

Healthy revenue growth as well as decline in depreciation charges resulted in 254% growth in the net profits in the current quarter as compared to Q3FY08. At current price of Rs 500, stock is trading at 2.5x and 3.0x on P/CEPS multiples on FY09 and FY10 estimates respectively. ACCUMULATE the stock with a price target of Rs 627 based on average of 4x P/CEPS and 3.5x EV/EBITDA on FY10 estimates.