Monday, 27 October 2008

Buy Shree Cements: HDFC Securities

HDFC Securities has maintained its buy rating on Shree Cements in its October 27, 2008 research report. "Cement demand growth in India has fallen sharply to 7% against 12% in H12009 and we expect the demand growth to be in the range of 8% for the next two years which may bring down the effective capacity utilization rate for the industry below 80% against our earlier estimates of 87% during FY09."

"At the current market price of Rs 378, the stock trades at a P/E of 3x FY09E and 3.5x FY10E. On EV/Tonne basis, it trades at USD 46 FY09E and USD 39 FY10E. On EV/EBITDA basis, it trades at 2.6x FY09E and 2.6x FY10E. SCM is reaping the benefits of timely capacity addition during FY08 as it increased its capacity by 2 mt during this year, which we expect to result in an earnings CAGR of 12.9% over the period FY08-FY10E. It is also one of the lowest cost cement producers across the Industry, a position we feel it will retain in the coming years. We maintain our BUY rating on the stock," says HDFC Securities' research report.

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Source: Moneycontrol

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