JK Cement Ltd. share price target

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...

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...

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.

We expect the company to register Revenue/EBITDA/APAT CAGR of 8%/18%/24% from FY20-FY23E driven by volume CAGR of 8% and consistent realisation improvement of 1.5% each over FY22E-23E. We value JKCL at 10.5x FY22E EV/EBITDA to arrive at TP of Rs.2150

Completion of phase-I expansion to fuel the growth With the commissioning of split grinding unit of 0.7 MT at Balasinor, 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 challenging year of FY21E we expect the company to clock volume CAGR of 13.2% to 12.5MT in FY22E (grey + white). The full volume benefit potential is expected to get reflected in...

JK Cement (JKCE) continued to gain market share in 2QFY21, with volume growing 26% YoY, led by ~40% capacity expansion. EBITDA grew 62% YoY to INR4.1b and was the highest ever, supported by lower cost. This in turn led to the highest ever EBITDA margin of INR1461/t. We raise our FY21E EBITDA by 16%, factoring in lower cost and target price by 15% to INR2,075/share. We reiterate our Buy rating on a 26% EPS...