Shree Cement: Lower realisation outlook, weak cost control raise concerns

The company lagged peers in the June quarter on realisations and ability to control costs

Shree Cement’s June 2020 quarter (Q1) results, announced on Monday after market hours, raise concerns on the margin front because of the subdued outlook on realisations and weak cost control. Valuations, too, are expensive, and factor in the superior return ratio and a healthy balance sheet.  

Shree Cement’s stock shed about 4.5 per cent in the last two trading sessions, even as the benchmark BSE Sensex was up 0.5 per cent during the same period. At around 24x its FY21 estimated EV/Ebitda (enterprise value to earnings before interest, tax, depreciation, and amortisation), the stock is trading at a 70 per cent