What Makes Shree Cement a Strong Pick in the Cement Sector Now?

Why Is Antique Bullish on Shree Cement’s Volume Recovery and Profitability?

Shree Cement (SRCM) is one of India’s leading cement manufacturers, known for its cost-efficient operations, market presence in northern and eastern India, and consistently strong profitability. The company has demonstrated an ability to maintain industry-leading EBITDA per ton, while its subsidiaries are beginning to make a meaningful contribution to consolidated performance. Antique has reiterated its Buy recommendation on Shree Cement with a target price of ₹33,500, citing strong volume recovery, market leadership, and sustainable profitability as the key drivers.

Volume Growth Recovery – A Primary Catalyst

Antique believes that volume recovery remains the biggest catalyst for Shree Cement’s performance. With demand expected to pick up, especially in infrastructure and housing, the company is set to deliver an 8% CAGR in volumes between FY25–28E. This provides the foundation for sustained earnings growth.

Subsidiary Contributions Rising

Subsidiaries now contribute 6% of consolidated EBITDA, up from 2% earlier, highlighting their growing relevance to Shree Cement’s overall profitability. This incremental contribution diversifies the earnings base and strengthens the long-term growth trajectory.

Profitability Leadership in Regional Markets

SRCM has maintained industry-leading profitability, generating ₹1,400/ton EBITDA in 1HCY25. This is nearly 20–25% higher than peers. With the eastern and southern markets contributing ~45% of the sales mix, Shree Cement continues to outperform its rivals on cost efficiency and realizations.

EBITDA/Ton Outlook

Assuming an 8% volume CAGR through FY25–28E, Shree Cement’s EBITDA/ton is projected to improve steadily:

• FY25: ₹1,079
• FY26E: ₹1,342
• FY27E: ₹1,384
• FY28E: ₹1,421

This rise reflects both cost optimization and higher realizations.

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Valuation Perspective

Shree Cement currently trades at ~15× 1HFY28E EV/EBITDA and ~USD 145 EV/ton, which is close to its long-term average. While valuations are not cheap, Antique notes that SRCM’s structural profitability advantage justifies the premium.

Risks to Monitor

• Slower-than-expected recovery in cement demand.
• Rising input costs impacting margins.
• Competitive pressure in the east and south markets.
• Policy changes in infrastructure and housing sectors.

Investor Takeaway

Antique’s bullish stance on Shree Cement is based on improving volumes, growing subsidiary contributions, and industry-leading profitability. With strong cost efficiency and realizations supporting EBITDA growth, SRCM remains a high-quality pick in the cement sector. While valuations are near historical averages, the company’s structural advantages provide confidence in sustained long-term performance.

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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.

tags: Shree Cement, SRCM, Antique Research, Cement Sector, Volume Recovery, EBITDA per Ton, Infrastructure Growth, Cement Valuation