JK Cement Ltd. share price forecast

TCNS Clothing: TCNS' journey to pre-pandemic sales remains underwhelming, partly given category-specific idiosyncrasies. Q2 operational performance was broadly in-line overall but lags peers. Revenue grew at 3% CAGR to INR3.5bn over three years (HSIE: INR3.4bn; Trent/Madura clocked 30/11%). Offline channels' sales just about crossed pre-pandemic sales (1.7% CAGR). However, channels' sales densities remain sub-par, unlike peers. Growth continues to demand more channel incentives (contribution margin: 39.6% vs pre-pandemic base of 43.1%, as expected). We largely maintain our FY24/25 EBITDA estimates and our SELL recommendation with a DCF-based TP of INR510/sh, implying 19x Sep-24 EV/EBITDA. Dilip Buildcon: Dilip Buildcon (DBL) reported revenue/EBITDA/PAT of INR 22.6/2.6/0.3bn; revenue missed our estimate while EBITDA/APAT beat our estimates. EBITDA margin, at 11.6%, exceeded our estimate of 8.9% due to lower revenue contribution from legacy low-margin projects (nearing completion) in the mix. The order book (OB), as of Sep'22, stood at INR 263.4bn (~2.9x FY22 revenue). The standalone net debt reduced further to INR 27.1bn, with net D/E at 0.61x, as of Sep'22. DBL received INR 2bn on the transfer of four projects to Shrem InvIT with INR 2.6/1.6bn receivable as units in Shrem InvIT/on the occurrence of certain events. DBL is targeting FY23 debt to be lower by INR 4-5bn vs FY22. DBL expects to receive INR 3-5bn through monetisation during the rest of H2FY23. The cash component has increased from INR 6.2bn to INR 7-7.5bn in the Shrem InVIT deal. We have recalibrated our EPS estimates higher to factor in margin recovery, robust OB growth, and debt reduction. As we...

The stock is currently trading at 17x/12x FY23E/FY24EEV/EBITDA. We value JKCL at 13x FY24E EV/EBITDA to arrive at a TP of Rs 3,350/share (Rs 3,020/share earlier), implying an upside of 14% from the CMP and maintaining our BUY rating on the stock.

JK Cement’s (JKCE) Q2FY23 EBITDA at Rs3bn (down 16% YoY) was above our / consensus estimates of Rs2.5bn led by lower costs and better volumes.

We recommend a Buy the stock for a target price of Rs 2920/ implying an upside of 10% from CMP

We value JKCL at 13x FY24E EV/EBITDA and assign a BUY rating to the company with a TP of Rs 3,020/share, implying an upside potential of 13% from the CMP

Ahluwalia Contracts: Ahluwalia Contracts (AHLU) reported weak revenue/EBITDA/APAT of 6/0.6/0.4bn, missing at all levels. AHLU continues to expect the top line to grow by 15% YoY in FY23, with EBITDA margin (incl. other income) in the range of 12%-13%. Margin is expected to improve from H2FY23 with softening of commodity prices, narrower gap of indices with input prices (currently at 40% and expected to narrow down to 20%), and slightly lesser competitive intensity. FYTD23 OB stands at INR 82bn (~3x FY22 revenue), excluding L1 in two projects of INR 7.9bn (Tata Memorial Hospital and MMRDA depot additional work). The order book (OB) is well diversified, with government/private orders comprising 81/19% of OB and East/North/West/South/international region contributing 37/35/18/5/5% to it. Segment-wise, institutional/hospital/ residential/commercial/infra/hotel contributed 34/33/14/9/8/2% to the OB. 15% of the OB of INR 82bn is fixed price contracts and is exposed to price volatility. The total order inflow in FYTD23 has been INR 28.6bn vs. FY23 OI guidance at INR 25-30bn. AHLU has a bid pipeline amounting to INR 50bn, of which 20% are from private clients. We maintain BUY on the stock, with an unchanged TP of INR 542 (13x multiple Mar-24E EPS). JK Cement: We downgrade our rating on JK Cement (JKCE) with a revised TP of INR 2,475 (11.5x Mar-24E consolidated EBITDA) on expensive valuations. In Q1FY23, healthy pricing recovery in north regions and subdued fuel cost inflation (low cost inventory benefits) drove up blended unitary EBITDA by 16% QoQ to INR 1,101 per MT as margin rebounded for both grey and white/putty...

We value JKCL at 13x FY24E EV/EBITDA to arrive at a TP of Rs 3,020 (Rs 2800 earlier) implying an upside of 14% from the CMP and maintaining our BUY rating on the stock.

JK Cement’s (JKCE) Q1FY23 EBITDA at Rs4bn, flat YoY, was better than our / consensus estimates of Rs3.5bn led by lower costs and better realisation.

In our view, JKCE would emerge as the sixth largest cement group in India with 21mnte grey plus white cement / putty capacity by Q3FY23 with potential to increase the same by >50% via brownfield expansion at ~US$70/te at its Panna unit (MP) in the medium term.

Heidelberg Cement: We maintain our REDUCE rating on Heidelberg Cement (HEIM), with a revised target price of INR 190/share (8.5x Mar-24E EBITDA). In the absence of any major planned expansion for the next three years, we expect subdued volume growth and loss in market share, as other players expand in HEIM's core markets. In Q4FY22, the company's QoQ volume recovery in the peak quarter remained muted at 9% (-1% YoY). Adjusted for prior-period incentives, unitary EBITDA recovered 24% QoQ to INR 751/MT. Since there was no major Capex outgo, the balance sheet continues to be firm: net cash on the books almost doubled YoY in Mar-22 to INR 1.5bn. Karur Vysya Bank: Karur Vysya Bank (KVB) reported a significant beat on our estimates, led by better NIMs and lower credit cost (1.1% annualised). Asset quality improved, with GNPA at ~6%, led by negative net slippages, while the restructured pool remained largely steady at ~2.8% of loans. Overall loan growth (+9% YoY) was driven by commercial (+12%), agri (+13%) and home loans (+9%). KVB is incrementally focused on driving granular growth (LAP, commercial banking, and other retail) and has guided for a 12% loan growth in FY23. With a steady NIM trajectory and improving line of sight on lower credit costs, KVB is well-placed to inch closer to its ~1% RoA target. We trim our FY23/FY24E earnings estimates by 1%/3% to factor in lower loan growth, partly offset by lower credit costs. Maintain ADD with a revised TP of INR63. JK Cement: We maintain our REDUCE rating...

The stock is currently trading at 15x/12x FY23E/FY24E EV/EBITDA. We value JKCL at 13x FY24E EV/EBITDA to arrive at a TP of Rs 2,800 (Rs 3100 earlier) implying an upside of 15% from the CMP and maintaining our BUY rating on the stock.

We maintain our BUY rating on the stock and value it at 13x FY24E EV/EBITDA to arrive at a target price of Rs 3,100/share, implying an upside of 35% from the current levels.

We roll over our estimate to FY24 and value JKCL at 14x FY24E EV/EBITDA to arrive at a TP of Rs 3,870. TP implies an upside of 10% from CMP and we change our rating from HOLD to BUY.

We value JKCL at 13.5x FY23E EV/EBITDA and assign a HOLD rating to the company.