Executive Summary
Shivam Cements Ltd. is a vertically integrated cement manufacturer in Makwanpur, with 3,000 TPD cement grinding and 1,900 TPD clinker capacity from captive limestone quarries. The company holds a 30% economic stake (via 85%-owned Shivam Holdings Ltd.) in Hongshi Shivam Cement — a 2.44 Mta plant that is among Nepal's largest cement facilities and a significant clinker exporter to India. In FY 2081/82, SHIVM's standalone net profit was Rs. 798.2M; consolidated (group) net profit was Rs. 1,429.5M. The Rs. 631M consolidated uplift is dominated by the share-of-associate profit of Rs. 606.2M (vs. Rs. 110.7M in FY 2080/81 — a ~5x increase per SHIVM AR FY 2081/82, line items extracted from the group P&L). The standalone balance sheet carries minimal long-term debt.
Five-Year Financial Trend (Standalone, NPR Crore)
Source: SHIVM Annual Reports FY 2075/76–FY 2081/82.
| Metric | FY 73/74 | FY 74/75 | FY 78/79 | FY 79/80 | FY 80/81 | FY 81/82 |
|---|---|---|---|---|---|---|
| Revenue | 736.4 | 1,026.5 | 926.0 | 775.3 | 770.4 | 776.7 |
| Gross Profit | — | — | 171.8 | 128.5 | 104.2 | 172.7 |
| Gross Margin | — | — | 18.6% | 16.6% | 13.5% | 22.2% |
| Finance Cost | — | — | 6.5 | 9.7 | 5.0 | 0.9 |
| PBT | — | — | 82.7 | 65.1 | 28.5 | 93.3 |
| Net Profit | 81.1 | 114.3 | 69.1 | 59.5 | 26.0 | 79.8 |
| Net Margin | 11.0% | 11.1% | 7.5% | 7.7% | 3.4% | 10.3% |
| Basic EPS (Rs.) | 32.45 | 29.53 | 15.70 | 13.52 | 5.50 | 15.22 |
| Book Value/Share (Rs.) | 159.7 | 161.6 | 208.9 | 211.3 | 188.5 | 188.5 |
| Dividend (%) | 10.43 | 15.79 | 10.53 | 15.0 | 9.0 | 12.5 (proposed) |
| Operating Cash Flow | — | — | 108.7 | 118.7 | 68.1 | 116.7 |
| Long-term Borrowings | — | — | 1.1 | 0.8 | 0.5 | ~0.01 |
| Clinker Production (MT) | 357,897 | 486,425 | 459,419 | 487,889 | 521,353 | 455,914 |
| Cement Sales (MT) | 547,420 | 690,306 | 753,739 | 675,455 | 750,732 | 652,153 |
Consolidated FY 2081/82 (Group, Including Associates)
Source: SHIVM AR FY 2081/82, group financial statements, lines 917, 937, 947, 948, 931.
- Group Revenue: NPR 7,786M (vs. standalone NPR 7,767M)
- Group Net Profit: NPR 1,429.5M
- Share of Profit of Associates (Hongshi Shivam): NPR 606.2M (FY 2080/81: NPR 110.7M)
- Group Basic EPS: Rs. 27.26
- Group Diluted EPS: Rs. 25.56
- Standalone Diluted EPS: Rs. 14.27
- Total Comprehensive Income (Group): NPR 1,442.0M
DuPont ROE (Standalone, FY 2081/82)
- Net Margin: 10.3%
- Asset Turnover: 0.62×
- Leverage: ~1.22×
- ROE ≈ 7.8%
- 5-year average ROE: ~6–7% (depressed by the FY 2080/81 trough at 2.7%)
Quality of Earnings
- FY 2081/82: Operating Cash Flow Rs. 117 crore vs. standalone Net Profit Rs. 79.8 crore (OCF/PAT = 1.46×).
- FY 2080/81: OCF Rs. 68 crore vs. NP Rs. 26 crore (2.6×).
- Earnings have been consistently cash-backed across the disclosed five-year window.
Balance Sheet Stress Test (30% Revenue Decline, Illustrative)
- Revenue: Rs. 776 crore → Rs. 543 crore.
- At 15% gross margin (trough scenario): gross profit ~Rs. 81 crore.
- Less admin + selling + distribution + finance ≈ Rs. 93 crore.
- Pre-tax operating: ~Rs. 12 crore loss before associate income.
- Dividend income from Hongshi (~Rs. 10–15 crore) substantially offsets.
- Cash position Rs. 65 crore + near-zero long-term debt provides multi-year runway.
Bull Case
1. Infrastructure capex tailwind. The FY 2025/26 federal budget provides record capex; hydro pipeline (Upper Arun, Dudh Koshi, Budhi Gandaki) is moving; Kathmandu-Terai Fast Track is in advanced construction. SHIVM's Q2 FY 2082/83 results showed a sharp YoY rebound (per ICT Frame reporting: net profit +528% YoY to NPR 35.7 crore, EPS NPR 12.77, revenue NPR 309 crore). If the run-rate persists, FY 2082/83 standalone net profit could materially exceed FY 2081/82.
2. Hongshi Shivam associate as the earnings engine. The 30% economic stake in Hongshi Shivam (via 85%-owned Shivam Holdings) contributed Rs. 606.2M to FY 2081/82 group earnings — roughly 76% of standalone net profit. Hongshi Shivam is among Nepal's largest cement plants and is a major clinker exporter to India. If Indian residential demand recovery continues and BIS-mark certification frictions ease, the associate contribution can grow further with no incremental capex from SHIVM.
3. Balance-sheet strength. Standalone long-term borrowings of approximately Rs. 0.01 crore against equity of Rs. 1,029 crore (per AR FY 2081/82). Operating cash flow exceeded Rs. 100 crore in three of the last four years. The company has dividend durability and dry powder for opportunistic acquisitions (e.g. the Rs. 27 crore Benighat Rorang quarry).
Bear Case
1. Structural overcapacity. Nepal has ~22 MT/year of installed cement capacity against ~8 MT/year of domestic demand (per industry reporting; see the Nepal Cement Industry report on this site). The company's own AR FY 2081/82 chairman commentary notes price pressure due to oversupply. Multiple Koshi-province plants temporarily halted in 2025; capacity will likely re-enter the market opportunistically when prices rise, capping any structural recovery.
2. Related-party complexity. Per AR FY 2081/82, FY 2081/82 standalone purchases included approximately Rs. 108 crore from Hongshi Shivam, Rs. 51 crore from Modern Infrastructure, Rs. 44 crore from Arvind Emporium, plus flows through additional related entities (Construction Solution, Premier Wires, Pashupati Syncnack, Infratec, Laxmi Lime, Century Holdings, Luckey Nepal). Promoter group (Goyal, Sharda, Maru, Gupta families) controls a substantial ownership share via Shivam Holdings and related entities. Minority shareholders rely on the audit and disclosure framework to verify arm's-length pricing.
3. Depreciation policy change (November 2023). The board extended useful lives of Plant & Machinery from 15 to 35 years, Mines Development from 20 to 30 years, and Buildings from 30 to 50 years in November 2023. This mechanically reduced annual depreciation and increased reported profit in FY 2080/81 and FY 2081/82.
4. NEA dedicated-line tariff litigation. SHIVM reports approximately Rs. 66.27 crore (Rs. 662.7M) under review with NEA, with bank guarantee implications and an interim writ pending.
Moat Assessment
Verdict: Narrow on cement; durable on resource access.
- Cement manufacturing. Brand recognition for "Shivam" earned over more than a decade of national-pride project supply. Distribution reach into nearly every district. Integrated cost-to-deliver from Makwanpur. These are real but contestable advantages — peers (Sarbottam, Hongshi-Shivam, Arghakhanchi, Ghorahi) compete actively. Pricing power is modest in a structurally oversupplied industry.
- Limestone reserves. Five quarry licences in Makwanpur (with the Benighat Rorang permit recently acquired). Government does not readily issue new quarry licences in forested zones. Subsidiaries holding additional permits include S.C.L Investments, Dantakali Quarries, Salbote Khanij, Sagarmatha Minerals, Parthbhira Limestone. The resource-access moat is the durable component.
- BIS certifications. Enables India export optionality.
Management
| Indicator | Detail |
|---|---|
| Chairman | Gaurav Goyal (2nd-generation promoter family) |
| Managing Director | Anjani Nandan Maru (founding promoter) |
| Note | Raghunandan Maru (previous MD) resigned in FY 2081/82 for personal reasons |
| Director shareholdings (per AR FY 2081/82) | Goyal 59,031 shares; Gupta 44,016 shares; Maru 3,505 shares; Sharda 1,364 shares |
| Promoter group control | Goyal/Sharda/Maru/Gupta families collectively control a substantial majority via Shivam Holdings and related entities |
Capital Allocation History
- 2018: Took the first FDI in Nepali cement via the Hongshi joint venture (70:30 via Shivam Holdings) — expanded economic exposure from ~1 Mta to ~3.5 Mta with no direct balance-sheet leverage.
- Dividend track record: 10.43% (FY 73/74), 15.79% (FY 74/75), 10.53% (FY 78/79), 15% (FY 79/80), 9% (FY 80/81), 12.5% proposed (FY 81/82).
- Other investments: Approximately Rs. 20 crore in Prabhu Bank promoter shares (currently below cost) and Rs. 25 crore in Himalayan Life large-cap fund.
Macro Setup
Tailwinds: Infrastructure capex acceleration; NRB rate cuts; remittance-driven construction; India clinker export corridor (subject to BIS resolution); Q2 FY 2082/83 earnings inflection signalling demand reflation.
Headwinds: Industry overcapacity (~22 MT capacity vs. ~8 MT demand); imported coal/petcoke pricing; NEA dedicated-line tariff disputes; provincial tax friction; political fragility post-September 2025.
Valuation
Current Multiples (May 2026)
| Metric | Value |
|---|---|
| Share Price (May 2026) | ~Rs. 670 |
| Shares Outstanding | ~55.93M (post FY 2081/82 2.5% bonus) |
| Market Cap | ~Rs. 3,748 crore |
| Standalone Basic EPS FY 2081/82 | Rs. 15.22 |
| Trailing P/E (standalone basic) | ~44× |
| Group Basic EPS FY 2081/82 | Rs. 27.26 |
| Trailing P/E (group basic) | ~24.6× |
| Group Diluted EPS FY 2081/82 | Rs. 25.56 |
| Book Value per Share (standalone) | Rs. 188.5 |
| P/B (standalone) | ~3.55× |
| Cash Dividend Yield | ~1.5% |
| Trailing ROE (standalone) | 7.8% |
| 5-year Average ROE | ~6–7% |
Three-lens View
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Earnings power. Standalone five-year average EPS approximately Rs. 11–12. Normalised steady-state Rs. 12–14. At Rs. 670, normalised standalone P/E is in the high 40s — high for a business with cycle-average ROE of ~7%. Group P/E on basic EPS of Rs. 27.26 is materially lower at ~24.6×.
-
Asset-based. Standalone book value Rs. 188.5 + embedded Hongshi Shivam stake carried at approximately Rs. 475 crore in the group books. Conservative NAV per share around Rs. 184–200 + an unrecognised limestone reserve premium.
-
DCF implied growth. At Rs. 670 with normalised standalone EPS of Rs. 12.5, a 12% discount rate and 3% terminal growth, the market is pricing in ~8–10% perpetual earnings growth — plausible only if the Hongshi Shivam contribution continues to compound faster than the standalone business.
Key Variables to Monitor
- Hongshi Shivam share-of-associate profit — group P&L line. The single most important earnings variable. FY 2080/81 Rs. 110.7M → FY 2081/82 Rs. 606.2M; if this holds at Rs. 150–250M per quarter, group earnings power is materially higher than standalone optics suggest.
- Q3 and Q4 FY 2082/83 standalone results — confirms whether the Q2 FY 2082/83 inflection (per ICT Frame coverage) is durable.
- NEA tariff dispute resolution — Rs. 66.27 crore under review.
- India BIS-mark issuance — directly affects Hongshi clinker export volumes.
- Coal / pet-coke landed cost — fuel is the single largest variable cost in clinker production.
- Receivables days — channel credit stress signal.
Sources
- SHIVM Annual Reports FY 2075/76–FY 2081/82 (primary source). Key references in AR FY 2081/82: line 917 (Revenue from Operations: Group Rs. 7,786M / Standalone Rs. 7,767M), line 937 (Net Profit: Group Rs. 1,429.5M / Standalone Rs. 798.2M), line 931 (Share of Profit of Associates Rs. 606.2M / prior year Rs. 110.7M), line 947 (Basic EPS: Group Rs. 27.26 / Standalone Rs. 15.22), line 948 (Diluted EPS: Group Rs. 25.56 / Standalone Rs. 14.27).
- Infomerics Credit Rating Nepal — Cement Industry Sectoral Report (August 2025)
- CemNet — Nepalese Cement Producers Under Pressure to Close (January 2025)
- ICT Frame — Shivam Cement Profit Growth Jumps 528% (Q2 FY 2082/83 reporting)
- ShareSansar SHIVM company page
- HR Goel Group — Hongshi Shivam Cement disclosures
- NRB — FDI in Cement Study (2021)
References
- SHIVM Annual Reports FY 2075/76–2081/82
- Hongshi Shivam Cement
- NEPSE Market Data
- Nepal Trade Information System
Research date: May 10, 2026.