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SHREECEM - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.5
| Stock Code | SHREECEM | Market Cap | 95,205 Cr. | Current Price | 26,385 ₹ | High / Low | 32,508 ₹ |
| Stock P/E | 56.6 | Book Value | 6,078 ₹ | Dividend Yield | 0.42 % | ROCE | 7.17 % |
| ROE | 5.69 % | Face Value | 10.0 ₹ | DMA 50 | 27,096 ₹ | DMA 200 | 28,095 ₹ |
| Chg in FII Hold | -0.27 % | Chg in DII Hold | 0.19 % | PAT Qtr | 277 Cr. | PAT Prev Qtr | 619 Cr. |
| RSI | 40.9 | MACD | 53.5 | Volume | 26,630 | Avg Vol 1Wk | 29,842 |
| Low price | 25,360 ₹ | High price | 32,508 ₹ | PEG Ratio | -2.75 | Debt to equity | 0.09 |
| 52w Index | 14.3 % | Qtr Profit Var | 198 % | EPS | 466 ₹ | Industry PE | 30.0 |
📊 Core Financials
- Quarterly PAT at 277 Cr vs 619 Cr previously, showing significant earnings decline.
- ROE at 5.69% and ROCE at 7.17% reflect weak capital efficiency compared to peers.
- Debt-to-equity ratio at 0.09 indicates a very low leverage and strong balance sheet stability.
- EPS at 466 ₹ provides a strong earnings base, though recent profit volatility is a concern.
💹 Valuation Indicators
- P/E ratio: 56.6, much higher than industry average of 30.0, suggesting overvaluation.
- P/B ratio: ~4.34 (26,385 ₹ / 6,078 ₹ book value), showing premium pricing.
- PEG ratio: -2.75, negative due to inconsistent earnings growth, highlighting valuation risk.
- Intrinsic value appears lower than current price, limited margin of safety.
🏢 Business Model & Competitive Advantage
- Shree Cement operates in cement and clinker production, with strong presence in North and East India.
- Competitive advantage lies in efficient operations, brand strength, and wide distribution network.
- Exposure to infrastructure and housing demand provides long-term growth opportunities.
📈 Entry Zone & Long-Term Guidance
- Entry zone: 25,500–26,000 ₹ range (near recent low of 25,360 ₹ and RSI at 40.9).
- Long-term holding viable for investors seeking exposure to India’s cement sector growth.
- Accumulation should be cautious due to stretched valuations and weak return metrics.
Positive
- Debt-to-equity ratio at 0.09, virtually debt-free.
- Strong EPS base (466 ₹).
- DII holdings increased (+0.19%), showing domestic institutional support.
Limitation
- High P/E (56.6) compared to industry average (30.0).
- Weak ROE (5.69%) and ROCE (7.17%).
- Negative PEG ratio (-2.75) indicates poor growth-adjusted valuation.
Company Negative News
- Quarterly PAT declined sharply (277 Cr vs 619 Cr).
- FII holdings decreased (-0.27%), showing reduced foreign investor confidence.
- Stock trading below 50 DMA (27,096 ₹) and 200 DMA (28,095 ₹), reflecting bearish trend.
Company Positive News
- DII holdings increased slightly (+0.19%).
- Strong brand presence and operational efficiency in cement sector.
Industry
- Industry PE at 30.0, much lower than Shree Cement’s 56.6, highlighting sector undervaluation relative to Shree Cement.
- Cement industry expected to grow steadily with infrastructure and housing demand in India.
Conclusion
- Shree Cement is financially stable with low debt but faces weak profitability metrics.
- Valuations remain stretched, making accumulation near 25,500–26,000 ₹ more attractive.
- Best suited for long-term investors seeking cement sector exposure, but caution advised due to high valuation multiples and earnings volatility.
I can also extend this into a peer comparison with UltraTech Cement and ACC to highlight how Shree Cement stacks up in valuation and profitability. Would you like me to draft that next?