ICICIdirect recommends HOLD on Shree Cement with increased target of Rs 8600.

Commenting on the investment rationale, ICICIdirect said, "Shree Cement's EBITDA of Rs 1185 tonne (up 21.9% YoY) was highest in our coverage universe led by higher realisation during the quarter. While cement revenues grew 30.6% to Rs 14.90 billion. Power segment revenues declined 45.7% YoY to Rs 1.68 billion due to 37.3% YoY decline in volume and 13.4% YoY decline in realisation to Rs 3.36 a unit. Net profit declined marginally 2.6% YoY to Rs 2.78 billion mainly on account of operating loss from the power segment and increase in depreciation & tax by 15.5% & 67.6% YoY, respectively.

The company is in the process of acquiring the 1.5 MTPA cement grinding unit of Jaiprakash Associates situated in Panipat, Haryana for a consideration of Rs 3.6 billion.A strong balance sheet and better efficiency in terms of cost remains a key positive for this company. We roll over our valuation base to FY16E and upgrade our target price to Rs 8,600 a share with a HOLD rating on the stock [i.e. at 12.5x FY16E EV/EBITDA, $190 tonne on FY16E capacity."

Shares of the company gained Rs 14.9, or 0.19%, to trade at Rs 7,930. The total volume of shares traded was 450 at the BSE (1.56 p.m., Wednesday).

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