Shree Cement (SHREECEM)

FairStock Score: 49/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Conservative balance sheet: Debt/Equity of only 0.10 provides financial cushion through cement cycles.
• Piotroski F-Score of 8/9 and Altman Z-Score of 3.98 indicate strong financial health and low distress risk.
• Positive free cash flow of ₹1,194 Cr reduces reliance on external capital.
• Promoter holding of 62.56% aligns management interests with minority shareholders.

Concerns

• Expensive valuation: P/E 52.49, P/B 4.27, EV/EBITDA 22.57; price far above Graham Number ₹8,165.66 and DCF value ₹17,720.73, leaving no margin of safety.
• Weak capital productivity: ROE 8.32% and ROCE 6.71% are below levels needed to create value at this price.
• Modest growth: 5-year revenue CAGR 7.30% and sales growth 6.38% do not justify a PEG ratio of 11.07.
• Dividend yield of 0.42% offers little compensation to investors waiting for value realisation.

AI Analysis

At ₹25,470, Shree Cement fails my first test: price. The market cap is ₹94,081 Cr, so I am paying a rich multiple for a business that earns only 8.32% on equity and 6.71% on capital. The P/E of 52.49 and P/B of 4.27 are far from Graham's margin of safety. Graham's Number is ₹8,165.66 and my DCF estimate is ₹17,720.73; at ₹25,470, the implied margin of safety is minus 219%. FairStock Score of 49/100 says mixed, and I agree. Let me be fair: this is not a troubled balance sheet. Debt/Equity is 0.10, Altman Z-Score is 3.98, Piotroski F-Score is 8/9, and free cash flow is ₹1,194 Cr. Promoter holding of 62.56% aligns interests. But what kind of business am I buying? Cement is a cyclical commodity. In such a business, price must be low enough to compensate for cyclical uncertainty. Five-year revenue CAGR is 7.30%, sales growth is 6.38%, and the latest quarter shows net profit of ₹268 Cr on sales of ₹4,801 Cr. That is a thin return on capital employed. Profit growth of 46.50% sounds impressive, but the PEG is 11.07 because the starting P/E is so high. Dividend yield of 0.42% is negligible. This is a financially safe cyclical, not a wonderful franchise at an attractive price. With EV/EBITDA of 22.57, the market is paying for perfection. I would rather wait for a price closer to intrinsic value, or for Shree Cement to prove it can earn meaningfully higher returns on capital. Patience is the discipline to say no when price exceeds value.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer