At a Glance
Shree Digvijay Cement (SDCCL) has delivered a decent Q1 FY26 performance: Revenue up 11% YoY to ₹196 Cr, PAT up 22% YoY to ₹14 Cr, and sales volume +6%. The company is running trial operations at its new cement plant, hinting at capacity expansion soon. Stock trades at P/E 46.7 – as if it’s UltraTech in disguise – while ROE lingers at 6.8%. Dividend payout is a generous ~80%, making income investors smile, but growth has been sluggish with only 9% sales CAGR over five years.
Introduction
If cement stocks were Bollywood characters, UltraTech would be the hero, ACC the seasoned veteran, and Shree Digvijay Cement… the sidekick who sometimes steals the scene. Founded in 1944, this company has seen everything – booms, busts, and boardroom reshuffles. Yet, it remains a smallcap with a loyal market.
Q1 FY26 showed growth, but historically, SDCCL’s margins have been volatile and profits inconsistent. The stock has corrected 15% in a year, suggesting investor patience is wearing thin. Can this plant expansion story cement a real turnaround?
Business Model (WTF Do They Even Do?)
SDCCL manufactures and sells cement in multiple formats – 50 Kg bags, 1.5 MT jumbo bags, and bulk. It also dabbles in logistics and trading. Products cater to all construction needs, from foundation to finish. Their market is largely in Western India, limiting geographical diversification. Unlike big players, SDCCL lacks pricing power and scale but makes up with operational efficiency and niche presence.
Financials Overview
- Q1 FY26 Revenue: ₹196 Cr (+11% YoY)
- Q1 FY26 PAT: ₹14 Cr (+22% YoY)
- FY25 Revenue: ₹725 Cr (-8% YoY)
- FY25 PAT: ₹25 Cr (vs ₹88 Cr FY24)
- OPM: 8% (TTM) – halved from 18% in FY24
- ROCE: 8.7% | ROE: 6.8%
Takeaway: Recent quarter shows recovery signs, but FY25 was a profit washout.
Valuation
- P/E Method
- EPS (TTM): ₹1.9
- Industry P/E (Cement Midcaps): 25x
- Fair Value = 1.9 × 25 = ₹47
- EV/EBITDA Method
- EBITDA (TTM): ₹59 Cr
- Net Debt: Nil (cash positive)
- EV/EBITDA: 10x
- Equity Value ≈ ₹590 Cr
- Fair Value ≈ ₹40
- DCF (Optimistic, new plant adds growth)
- Growth: 10%, WACC: 11%
- Fair Value ≈ ₹60
Fair Value Range: ₹40 – ₹60
At CMP ₹87.6, the stock trades at a premium not backed by fundamentals.
What’s Cooking – News, Triggers, Drama
- New Cement Plant Trials – capacity expansion could boost volumes.
- Dividend Payout ~80% – attractive for yield seekers.
- Q1 PAT +22% – signs of margin stabilization.
- Past Profit Collapse FY25 – must recover for sustained re-rating.
- Stock down 15% YoY – correction offers entry for brave hearts.
Balance Sheet
| FY25 (₹ Cr) | Assets | Liabilities | Net Worth | Borrowings |
|---|---|---|---|---|
| 695 | 695 | 364 | 111 |
Auditor’s Joke: Low leverage is good, but asset utilization is like a lazy cement mixer – slow.
Cash Flow – Sab Number Game Hai
| Year | Ops | Investing | Financing |
|---|---|---|---|
| FY23 | 86 | -37 | -50 |
| FY24 | 96 | -61 | -34 |
| FY25 | 135 | -164 | 65 |
Remark: Healthy cash from ops, but capex (new plant) is draining investing cash.
Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | 6.8% |
| ROCE | 8.7% |
| P/E | 46.7 |
| PAT Margin | 8% |
| D/E | 0.2 |
Roast: Valuation is UltraTech-level, returns are not. Investors betting on expansion magic.
P&L Breakdown – Show Me the Money
| Year | Revenue (₹ Cr) | EBITDA (₹ Cr) | PAT (₹ Cr) |
|---|---|---|---|
| FY23 | 792 | 146 | 88 |
| FY24 | 725 | 57 | 25 |
| FY25 | 744 | 59 | 28 |
Commentary: After a stellar FY23, FY24-FY25 profits crashed. Q1 FY26 is a glimmer of hope.
Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| UltraTech Cement | 77,752 | 6,911 | 52.3 |
| Ambuja Cements | 35,045 | 4,143 | 36.7 |
| Dalmia Bharat | 13,995 | 923 | 45.5 |
| Shree Digvijay Cem | 744 | 28 | 46.7 |
Verdict: Tiny player with big valuations – the market is pricing a turnaround.
Miscellaneous – Shareholding, Promoters
- Promoters: 54.7% (stable)
- FIIs: 1.1% (negligible)
- DIIs: 2%
- Public: 42.3%
- Dividend: Yield 1.7% with a payout ratio of 80% – investor-friendly.
EduInvesting Verdict™
Shree Digvijay Cement is a smallcap with clean balance sheet, generous dividends, and expansion underway. However, it’s also a stock priced for perfection, despite poor FY25 numbers. The new plant is the key trigger – if volumes and margins expand, the premium valuation may be justified. Otherwise, the stock risks derating.
Past Performance:
- Sales CAGR (5Y) 9%, Profit CAGR negative (-15%).
- Stock CAGR: 13% (5Y), -15% (1Y).
Upcoming Headwinds:
- Execution risk on plant ramp-up.
- Competitive cement pricing pressure.
- High valuation vs low returns.
SWOT Analysis:
- Strength: Low debt, strong dividends, plant expansion.
- Weakness: Low ROE/ROCE, erratic profits.
- Opportunity: Western India demand, infra push.
- Threat: Margin compression, overvaluation.
Final Word:
At ₹87.6, SDCCL trades like a turnaround bet rather than a value play. The next few quarters will decide if this cement company builds strong foundations or crumbles under market expectations.
Written by EduInvesting Team | 30 July 2025SEO Tags: Shree Digvijay Cement, Q1 FY26 Results, Cement Stocks, Smallcap Cement Expansion
