Shree Cement (SRCM) posted a multi-year high quarterly growth of +36% y-o-y (vs. our estimate of 31% y-o-y) in volume to 5.6mt, though realization was down by 8.6% q-o-q (vs. our estimated decline of 4.3% q-o-q). In Q3FY16, SRCM’s revenue grew by +28% y-o-y to `20.1 billion (vs. our estimate of `19.6 billion). Cement revenue was in line after a volume-price trade-off, while Power volume and revenue grew ~2x y-o-y.

EBITDA came in at `5.1 billion (+50% y-o-y) as against our estimate of ` 4.5 billion, while EBIDTA margin stood at 25% (+1.8pp q-o-q) as against our estimate of 23%. Unitary cost was down 10% y-o-y (-9% q-o-q), led by energy (pet coke benefits) and positive operating leverage.

Cement EBITDA stood at `736/ton (-7% q-o-q/y-o-y) as against our estimate of `753/ton. Power EBITDA came in at `1.4/unit (as compared to `0.9/unit in Q2FY16 and `0.36/unit in Q3FY15), led largely by lower costs. PAT came in at `2.2 billion (+80% y-o-y) as against our estimate of `1.6 billion. Higher depreciation (in Cement) for the quarter was offset by tax write back.

With the sector poised for recovery, we remain confident of SRCM’s ability to deliver a consistent outperformance. We maintain Buy, with a target price of `14,600 (EV of 14xFY18E EBITDA and $220/ton). Investors are advised to watch out for the right entry opportunity.