Shree Cement (SRCM) Q3FY21 EBITDA was higher than our estimate by 13%. Beat in the number is driven by volume, as SRCM reported volume growth of +15% YoY versus our estimate of 10%. Sales in North, East led SRCM to report double digit volume growth, said IDBI Capital in its report.

Post the result, the broking firm has changed volume assumption and increased EBITDA by 5%/6%  for FY22E/23E. TP is revised upward to Rs 22,517 (earlier 21,472), valued on an unchanged EV/EBITDA multiple of 18x.

"Stock in the last one month is down by 13%, this has made us to revise our rating to Hold from Reduce earlier. SRCM valuation premium to UTCEM has narrowed to 54% (from the highs of 80%) versus historical average of 45%. Stock catalyst is capacity addition of 3mt each in East and West, which will increase company's capacity by +15% YoY to 46mt," it added.  

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