shree cement shares: Shree Cement shares drop over 3% after 51% YoY decline in Q1 PAT. Should you invest?

Shares of Shree Cement on Thursday fell 4% on BSE to its day’s low of Rs 24,234.15 after the company reported a 51% year-on-year (YoY) decline in its net profit for the June quarter to Rs 278.6 crore.

The company reported a net profit of Rs 572.3 crore for the corresponding quarter of the last financial year.

Meanwhile, the revenue from operations stood at Rs 5,123.9 in the June quarter of FY25, up by 1.75% from Rs 5,035.6 crore reported in the year-ago period.

The company’s total expenses in the June quarter grew by 4.4% to Rs 4,618, up from Rs 4,422 in Q1FY24. In the previous quarter, the total expenses were reported at Rs 4,438 crore.

Here is what brokerages say:

Nomura: Buy| Target price: Rs 33,400

Nomura maintained a buy call on Shree Cement with a target price of Rs 33,400.Q1 results’ lower-than-expected blended realization leads to an EBITDA miss while the capacity expansion is on track to reach 74MT by FY26F.Motilal Oswal: Neutral| Target price: Rs 27,500

Motilal Oswal has maintained a neutral view on the stock with a target price of Rs 27,500.

The domestic brokerage firm stated that it continues to believe that most of the company’s expansions focus on existing markets (North, East, and part of South), while a large part of Central India and West will remain untapped until FY27E. Management indicated that cement demand will remain weak until CY24-end, which will also adversely impact prices.

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Emkay Global: Add| Target price: Rs 27,300

Emkay Global maintained an add rating on the stock with a target price of Rs 27,300.

Change in the geographical mix (with increased share in the East), higher lead distance (+21km QoQ), and stabilization cost for new plants have impacted profitability in the quarter. The management also expects demand/prices to remain subdued in the near term and to improve Q4FY25 onward.

Nuvama: Hold| Target price: Rs 27,022

Nuvama has retained its hold rating on Shree Cement with a revised target price of Rs 27,022, from an earlier Rs 28,373

Shree Cement delivered robust volume growth (up 8% YoY) in Q1FY25 while the EBITDA at Rs 916 crore missed the estimate by 24% due to lower-than-expected blended realisation (down 6% QoQ versus 3% for industry), partly due to a change in geographical mix. The company’s capex plan might help deliver sustained volume growth while cost efficiency measures would allow it to sustain cost leadership in the cement industry.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)