JK Cement Ltd. share price target

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

The stock is currently trading at 15x/13x FY22E/FY23EEV/EBITDA which we believe is fairly valued. We value JKCL at 13x FY23E EV/EBITDA to arrive at a TP of Rs 3,100 and change our rating from BUY to HOLD.

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 company 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...

J K Cement (JKCE) continues to gain market share, with volumes up 71% YoY in 1QFY22, led by a ~40% capacity expansion. We expect this to continue over the next 45 years as the company is now setting up a 4mtpa greenfield plant (commissioning by 1QFY24) in Central India. This plant should improve the regional mix for North and Central India to ~85%. We keep our estimates broadly unchanged and reiterate Buy on a 21% EPS CAGR over FY2123E, driven by a 12% volume CAGR. Higher grey cement realization drives 21% beat on EBITDA...

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,...

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...

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...