India’s cement sector is poised for strong growth in 2024 on the back of government infrastructure projects and a revival in real estate. Shree Cement, one of the country’s largest cement makers, is well-positioned to benefit from the industry tailwinds.
On December 28th, 2023, the company announced an upcoming board meeting on January 31st, 2024 to consider its latest financial results and an interim dividend for FY 2023-24. The announcement sparked investor interest as Shree Cement stock rose 0.12% intraday to Rs 28,654.50 per share.
Shree Cement Share Price Outperforms Broader Markets
The cement maker’s shares have staged an impressive recovery after a pandemic-led slump in 2020. Over the last six months, Shree Cement’s stock has climbed 20% significantly outperforming benchmark indices Sensex and Nifty 50.
Long-term investors have even more reason to cheer. Shree Cement has delivered a solid 23% returns over the past year, highlighting its resilience even during periods of broader market volatility.
With government thrust on infrastructure in the upcoming budget, strong pricing power and cost efficiencies, the cement maker is well positioned to continue its share price outperformance in 2024.
Higher Realizations To Boost Shree Cement’s Profits
Cement companies like Shree benefited from sustained price hikes and improved realization per tonne throughout 2022. With key states like UP, Bihar and MP still facing cement supply constraints, pricing power is expected to sustain.
Higher realizations will boost profits and cash flows for Shree Cement. Its upcoming results for the December 2023 quarter are likely to reflect volume growth and rising prices on a year-on-year basis.
The cement maker is also ramping up production capacities across existing plants. Added volumes from capacity expansion will aid top line growth in 2024.
Strong Cash Flows Support Higher Dividend Payout
Shree Cement has emerged among the most efficient cement manufacturers in India. Its focus on conservation of resources has led to higher profitability and cash flow generation over the years.
As of FY23, the company reported operating profit margins of 13.2% – among the highest in the industry. The high margins translate into surplus cash on books for Shree Cement.
As on 30th September 2023, the company had free cash and liquid investments worth over ₹8,052 crore on its balance sheet. The strong cash position provides room for a higher dividend payout in 2024.
Shree Cement has set February 8, 2024 as the record date for dividend. Investors looking to receive the payout need to buy the shares latest by February 7th.
The quantum of dividend will be announced in the upcoming board meeting on 31st January. Given its strong balance sheet and cash flows, the payout is likely to be higher than year-ago levels.
Global Macro Factors Support Cement Sector Growth
After several pandemic-hit years, India’s cement sector is gearing up for a Capex revival across real estate and infrastructure projects. Pent-up demand and improved affordability for housing is bringing buyers back to the property market – driving cement demand.
Alongside, the government’s sustained thrust on roads, metros and other public infrastructure projects will support cement consumption nationally.
Global macro factors like softening commodity prices also augur well for players like Shree Cement. Input costs are likely to be benign, supporting profitability margins in 2024.
As demand growth returns to the Indian cement sector, efficient manufacturers like Shree Cement are poised for market share gains as well as better financial performance. Its upcoming dividend sets the stage for handsome returns to shareholders.