Shree Cement

Shree Cement
Cluster: Emerging Star
Recommendation: Book profit
Current market price: Rs367

 

Book your gains

 

We had recommended a Buy on Shree at Rs267 with a price target of Rs353 on January 5, 2005. Subsequently we revised our price target to Rs400.The stock has appreciated by 39%  since we recommended a Buy on it. However we believe the rising fuel cost will affect the earnings of all cement players and consequently have an impact on their valuations.

At the current market price of Rs367 Shree is quoting at US$98 per tonne of cement (on expanded FY2006 capacity of 3.8 million tonne) and at 6.5x FY2006 E earnings before interest, depreciation, tax and amortisation. We believe the stock's valuations are justified and advise investors to book profits at these levels.

Source : Sharekhan