SHREECEM - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 3.4

📊 Financials: Shree Cement has a market cap of ₹92,367 Cr. Current price is ₹25,600 with a 52-week high/low of ₹32,508/₹24,811. PAT this quarter is ₹277 Cr vs ₹619 Cr in the previous quarter, showing a sharp decline. ROCE at 7.17% and ROE at 5.69% reflect weak efficiency compared to industry peers. Debt-to-equity ratio of 0.09 indicates a strong balance sheet with minimal leverage.

💹 Valuation: Stock P/E is 54.9, significantly higher than industry PE of 33.2, suggesting overvaluation. Book value is ₹6,078, giving a P/B ratio of ~4.2. PEG ratio at -2.67 indicates poor earnings growth relative to valuation. EPS is ₹466, showing profitability but not aligned with premium multiples. Dividend yield of 0.43% provides limited shareholder return.

🏭 Business Model: Shree Cement operates in cement and building materials, with a strong presence in North and East India. Competitive advantage lies in efficient operations, brand strength, and scale. However, cyclical demand in construction and infrastructure impacts profitability consistency.

📈 Entry Zone: Technically, DMA 50 (₹27,257) and DMA 200 (₹28,479) are above current price, showing bearish trend. Entry is favorable near ₹24,800–₹25,500 if price consolidates. Current RSI at 34.1 indicates oversold conditions, offering potential accumulation opportunity.

🕰️ Long-Term Holding: Strong brand and low debt support long-term compounding, but stretched valuations and weak return ratios limit attractiveness. Investors should accumulate cautiously on dips closer to intrinsic value zones.

Positive

• ✅ Debt-to-equity ratio low (0.09)
• ✅ Strong EPS (₹466)
• ✅ FII holding increased (+0.27%)
• ✅ Established brand and scale in cement industry

Limitation

• ⚠️ High P/E (54.9) vs industry PE (33.2)
• ⚠️ Weak ROCE (7.17%) and ROE (5.69%)
• ⚠️ PEG ratio negative (-2.67)
• ⚠️ Dividend yield low (0.43%)

Company Negative News

• 📉 DII holding reduced (-0.25%)
• 📉 Quarterly PAT decline (619 Cr → 277 Cr)
• 📉 Bearish technical trend (MACD -389)

Company Positive News

• 📈 FII inflows (+0.27%)
• 📈 Strong long-term efficiency in operations

Industry

• 🏭 Cement industry PE at 33.2 highlights fair sector valuation
• 🏭 Sector supported by infrastructure and housing demand

Conclusion

🔎 Shree Cement is a strong brand with low debt and consistent operations, but weak return ratios and stretched valuations limit attractiveness. Entry zone lies near ₹24,800–₹25,500. Long-term investors can accumulate cautiously on dips, while monitoring profitability trends and industry demand cycles.

Would you like me to extend this with a peer benchmarking overlay comparing Shree Cement against other cement majors, or a sector scan to highlight undervalued infrastructure-linked companies?