JK Cement Ltd. share price target

The stock is currently trading at 13.8x/11.8x FY22E/23E EV/EBITDA. We value JKCL at 13x FY23E EV/EBITDA to arrive at a TP of Rs3130, implying an upside of 11% from CMP.

Completion of phase-I expansion to fuel growth in FY22E The entire 4.2 MT has been commissioned this fiscal. The newly added capacities include 1 MT grinding unit (GU) each in Nimbahara and Mangrol along with 2.6 MT clinker plant and 1.5 MT GU in Aligarh and 0.7 MT GU in Gujarat (Balasinor). Hence, despite the challenging environment, the company has been able to post 19% growth in volumes. Going forward also,...

JKCE continues to gain market share, with volumes up 46% YoY in 4QFY21, led by ~40% capacity expansion. We expect this to continue over the next 4-5 years as it is now setting up a greenfield 4mtpa plant (commissioning by 1QFY24) in Central India. This plant should improve the regional mix to ~85% in North and Central India. We keep our estimates broadly unchanged and reiterate Buy on a 16% EPS CAGR over FY21-23E, driven by a 12% volume CAGR....

Background: JK Cements is one of the largest cement players in North India. It manufactures grey cement, white cement and white cement-based wall putty. Currently the grey cement capacity is 10.5MTPA. Domestic white cement capacity is 0.6MTPA (second only to UltraTech). The com pany also manufacturers putty and has an installed capacity of 0.7MTPA. The company also has plants in Fujairah (UAE) with an installed capacity of 0.6MTPA (white cement) and 1.02MTPA (grey cement) in a 90:10 JV with the Government of Fujairah. It has also expanded its grey cement capacity by 3 MTPA through two split grinding units (1.5 MTPA...

We roll over our estimate to FY23 and value JKCL at 11x FY23E EV/EBITDA to arrive at TP of Rs.2520, an upside of 11% from the current level.

Completion of phase-I expansion to fuel growth The entire 4.2 MT has been commissioned this fiscal. The newly added capacities include 1 MT grinding unit (GU) each in Nimbahara and Mangrol along with 2.6 MT clinker plant and 1.5 MT GU in Aligarh and 0.7 MT GU in Gujarat (Balasinor). Hence, despite a challenging FY21E, the company is likely to report volume growth of 14% to 11.1MT. For FY20-23E, we expect volume and revenue CAGR of 12.1% and 12.5%, respectively. Phase-II expansion in MP to add another 4 MT capacity...

Our top result pick: JK Cement.

A leading cement manufacturer in the country, JK Cement Ltd is an affiliate of the multi-disciplinary industrial conglomerate JK Organization, which was founded by Lala Kamlapat Singhania. We recommend buy with a target price of Rs. 2,150 valuing company at 10.5x FY22E EV/EBITDA.

JKCE's revenue was in line and EBITDA, EBITDA/tn and PAT was above estimates. Volumes and realization were in line and cost lower than estimates. This is the highest ever quarterly revenue, EBITDA, EBITDA/tn and PAT for the company. JKCE posted strong set of numbers with 23.6%/ 61.7%/ 105.5% YoY growth in revenue/ EBITDA/ PAT to Rs15.5 bn/ Rs4.1 bn/ Rs2.2 bn in Q2FY21 led by 25.5% YoY growth in blended volume, partially offset by...

We recommend a BUY on JK Cement Ltd with a Target Price of Rs.1990, and upside of 7% from CMP of Rs. 1863 and Stop Loss of Rs.1800.