Emkay has recommended `Accumulate ` on Shree Cementwith a price target of Rs 2,330 as against the market price (CMP) of Rs 2,240 in its report dated Nov. 11, 2010. The brokerage house gave the following investment rationale:Revenue down 20.2 % yoy- 8.1% decline in cement revenues
Revenues for the quarter at Rs 7.17 billion declined 20.2%yoy and 24% qoq, impacted by 20% decline in cement revenues and 27.6% decline in revenues from power segment. Cement volumes declined by 7.6% yoy to 2.27 mnt, as off take was impacted by lower demand and severe monsoon across northern region. This coupled with lower realisations of Rs 3010/t, down 13.4% yoy resulted in cement revenues declining 20%yoy to Rs 6.86 billion (our estimate-Rs 7.07 billion)
Revenues for the quarter at Rs 7.17 billion declined 20.2%yoy and 24% qoq, impacted by 20% decline in cement revenues and 27.6% decline in revenues from power segment. Cement volumes declined by 7.6% yoy to 2.27 mnt, as off take was impacted by lower demand and severe monsoon across northern region. This coupled with lower realisations of Rs 3010/t, down 13.4% yoy resulted in cement revenues declining 20%yoy to Rs 6.86 billion (our estimate-Rs 7.07 billion)
Power segment impacted by lower volumes & realisation
Shree`s powers segment was severely impacted by lower volumes & decline in power realisations. Power volumes (own generation) declined by 21.4% yoy and 64.7% qoq, while realization declined by 38.7%yoy and 27.8%qoq to Rs 4.17/unit. Consequently Power revenues declined by 27.6% yoy to Rs 315 million (Rs 210 million from sale of self generated power and Rs 105 million from traded power). Cost of power increased 36.6% yoy to Rs2.47/unit as pet coke prices increased significantly. However sequentially, cost declined by 18%, driven by higher share of power generated from waste heat recovery plant. EBITDA/unit saw decline of 66% yoy and 38.3% qoq to Rs 1.7/unit.
Shree`s powers segment was severely impacted by lower volumes & decline in power realisations. Power volumes (own generation) declined by 21.4% yoy and 64.7% qoq, while realization declined by 38.7%yoy and 27.8%qoq to Rs 4.17/unit. Consequently Power revenues declined by 27.6% yoy to Rs 315 million (Rs 210 million from sale of self generated power and Rs 105 million from traded power). Cost of power increased 36.6% yoy to Rs2.47/unit as pet coke prices increased significantly. However sequentially, cost declined by 18%, driven by higher share of power generated from waste heat recovery plant. EBITDA/unit saw decline of 66% yoy and 38.3% qoq to Rs 1.7/unit.
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