Rs 50/Share Dividend: Rs 28,500 Cement Stock To Trade Ex-Dividend On February 8: Buy Or Sell?

One of the leading cement makers, Shree Cement will take centre stage this week as its nearly Rs 28,500 per share price will turn ex-dividend on February 8. The company will pay interim dividends to the tune of 500% amounting to Rs 50 per share. In the third quarter of FY24, the company registered double-digit growth in revenue and net profit.

Shree Cement Share Price:

Last week, on Friday, Shree Cement's share price stood at Rs 28,463.15 apiece, down by 3.9% on BSE with a market cap of Rs 1,02,697.17 crore.

In the last five trading sessions, Shree Cement is down marginally. In six months, the stock gained by 18% on BSE.

Shree Cement Dividend:

The board has declared an interim dividend of a whopping Rs 50 per share having a face value of Rs 10 each for FY24. In percentage terms, the payout is up to 500%.

The dividend is payable to those shareholders who hold shares on the record date fixed by the Company- i.e. Thursday, 08th February 2024. The dividend shall be paid from Wednesday, 21st February 2024.

Shree Cement Q3 Results:

In Q3FY24, the company registered 56% YoY and 29% QoQ growth in net profit to Rs 734 crore. Net revenue went up YoY by 20% from Rs 4,069 crore to Rs 4,901 crore. Total sale volume increased YoY by 11% from 8.03 million tonnes to 8.89 million tonnes. Capacity utilization improved from 72% to 77% on a YoY basis. Sale of premium products risen to 9.5% vis-à-vis 7.2% of total trade sales on a YoY basis

Recently, the Company commenced commercial production from its integrated cement plant at village Gothra in Nawalgarh Tehsil of Rajasthan having a clinker capacity of 11500 tonnes per day (3.8 million tonnes per annum) and cement capacity of 3.5 million tonnes per annum w.e.f. 22nd January 2024.

The work on the 18 million tonnes capacity expansion projects already announced is running as per schedule. Additionally, the Company has decided to add one more cement mill of 3.0 million tonnes per annum capacity at its upcoming plant at Ras in Rajasthan. On completion, our total India cement capacity will be around 75 million tonnes.

Primarily fueled by investments in infrastructure and large-scale housing projects, cement demand in India is expected to remain robust in the mid-term in line with the country's broader economic development goals.

Shree Cement Brokerages View:

In its brokerage note, Centrum said, Shree Cements (SRCM) reported a good set of results for 3QFY24 with EBITDA of Rs12.3bn, up 74% YoY and 15% ahead of our estimate. Sharp reduction in operating costs by Rs405/mt on a QoQ basis, resulted in a beat on earnings. SRCM was able to deliver industry-leading volume growth and profitability in this quarter. The company is on track to reach 75mn mt of capacity by FY27 and the same is expected to be funded through internal accruals. The company has launched a new brand campaign to increase its brand recall in the market and eventually improve realizations through premium product offerings.

Centrum's note added, "We expect a gradual increase in premium product sales for the company over the next few years leading to better realizations. We have tweaked our assumptions to factor in lower costs and our FY25/FY26 EBITDA estimates are higher by 7.5%/6.4% respectively. We continue to value the stock based on 16x Sep25 EV/EBITDA to arrive at our revised TP of Rs25,284 (Rs23,560 earlier). We maintain our Sell rating of the stock owing to rich valuations despite strong operating performance."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.