JK Cement Ltd. share price target

JK Cement’s (JKCE) Q4FY24 EBITDA (of INR 5.48bn, up 51% YoY but down 10% QoQ) stood broadly in line with estimates as sustained drop in variable cost helped offset the operating leverage disappointment (of fixed cost being flat QoQ).

POWERIND: In-line quarter but valuations overdone; cut to SELL. FY25 Budget Preview: Focus to remain on consolidation. KMB: NIM intact QoQ; higher provisions dull profits. AXSB: Profits subdued despite strong business growth. HAVL: Slow quarter but summer could bring cheer; maintain BUY. KEII: Decent quarter; maintain HOLD. JKCE: Healthy performance but priced in. GLS: Strong margins make up for subdued revenue growth

We maintain our BUY recommendation on the stock.

We recommend a Buy the stock for a target price of Rs 3860 implying an upside of 10% from CMP.

We maintain our BUY recommendation on the stock.

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.

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