SHREECEM - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.3

📊 Core Financials Breakdown

Profitability

ROE of 5.69% and ROCE of 7.17% are below industry standards, indicating underutilization of capital.

EPS of ₹415 is strong, but not enough to justify the high P/E of 72.1.

PAT improved from ₹556 Cr to ₹619 Cr QoQ — a 94.7% jump, signaling short-term earnings momentum.

Balance Sheet Strength

Debt-to-equity ratio of 0.05 reflects a conservative capital structure.

Dividend yield of 0.37% is modest, suggesting reinvestment focus.

Cash Flow & Stability

Book Value of ₹5,879 vs Current Price ₹29,960 implies a P/B ratio of ~5.1 — premium valuation.

PEG ratio of -3.51 is distorted due to inconsistent earnings growth.

📉 Valuation Metrics

Metric Value Insight

P/E Ratio 72.1 Significantly overvalued vs industry PE of 47.3

P/B Ratio ~5.1 Premium pricing

PEG Ratio -3.51 Not meaningful due to erratic growth

Intrinsic Value ~₹25,000–₹27,000 Estimated below current price

The stock appears overvalued, especially considering its modest return metrics.

🧱 Business Model & Competitive Edge

Sector: Shree Cement Ltd is one of India’s largest cement producers, with operations across North and East India.

Strengths

Strong brand and operational scale

Efficient cost management and low debt

Institutional interest remains steady (FII +0.37%)

Challenges

Weak ROE/ROCE despite scale

High valuation multiples

Negative MACD and neutral RSI suggest technical weakness

According to TopStockResearch, Shree Cement’s ROA is just 4.44%, and its current ratio is 1.94 — both indicators of moderate financial health

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📌 Entry Zone Recommendation

Suggested Entry Range: ₹26,000–₹27,500

Below 200 DMA (₹29,218) and closer to intrinsic value

RSI at 48.6 suggests neutral momentum

MACD negative, indicating short-term weakness

🧭 Long-Term Holding Guidance

Hold if Already Invested: Strong brand and low debt support long-term stability.

Wait for Better Entry if New Investor: Valuation is stretched; a dip would offer better margin of safety.

Watchlist Triggers

ROE/ROCE improvement

Volume breakout

Institutional accumulation

Shree Cement is a solid player in a cyclical sector, but its current pricing demands caution. Let me know if you'd like a peer comparison with UltraTech or ACC.

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