JK Cement Ltd. share price target

QoQ margin improvement in a seasonally weak Q2 is rare and JK Cement (JKCE) has surprised on this front with >200bps margin jump. As a result, EBITDA in Q2FY24 stood ~12% ahead of estimate at ~INR4.5bn. Calibrating the upbeat in H1FY24 and firm underlying cement prices in key markets of North and South India, we revise up our FY24E EBITDA by ~6% but keep FY25E largely intact.

We maintain our BUY recommendation on the stock.

Q2 revenue grew 20% YoY to Rs 25.7bn as grey cement volumes surged 22% to 3.9mt

we assign a BUY rating to the company, with a Target Price (TP) of Rs 3,560/share, suggesting a potential upside of 12% from the current market price (CMP).

JK Cement’s (JKCE) Q1FY24 performance stood strong, being one of the few cement companies to report a QoQ margin improvement of ~170bps (EBITDA stood 15% ahead of estimates). We see scope for further margin improvement owing to near-term benefits of a) incentives from the new Panna unit (in Madhya Pradesh)

Recommendation: We maintain our BUY recommendation on the stock.

Volume growth healthy including contribution from the new Panna unit that has attained 60% capacity utilisation

Recommendation: We maintain our BUY recommendation on the stock and roll over our estimates to FY25.