Buy Shree Cements; target of 2328: Jaypee Capital


Bangalore: Jaypee Capital is bullish on Shree Cements and has recommended buy rating on the stock with a target of 2328. According to Jaypee Capital, Shree Cement's current power generating capacity of 260mw is enough to meet the 100 percent power requirement of cement business (even on expanded capacities). Shree Cement is an India-based cement manufacturing company. It operates in two segments: cement and power. The Company has manufacturing plants located at Beawar, Ras, Khushkhera and Suratgarh in Rajasthan, and Laksar (Roorkee) in Uttarakhand. The Company's product brands include Shree Ultra, Bangur and Rockstrong. As of March 31, 2010, the Company sold 9270788 metric tons of cement. As of March 31, 2010, the Company sold 976299 metric tons of clinker and 2635.93 lakh units of power. The company has already completed 1st phase of power expansion plan (140mw) by June'10 where as 2nd phase of 300mw merchant power expansion plan at Beawar, Rajasthan is likely to be completed by Dec'11 taking total capacity to 560mw. Jaypee Capital says, at current market price of 1900, the stock is trading at a PE of 13.5x discounting trailing four quarters EPS, EV/EBIDTA of 5.5x and EV/tonne of $177 discounting FY'10 earnings and capacity respectively. With the recommended price of 2328, if the stock is bought at Monday's closing price of 1830.55, the percentage of gain would be 21.36 percent.