JK Lakshmi Cement Ltd. share price target

Strong revenue growth, but fuel cost surge impact margins JK Lakshmi Cement (JKLC) is part of JK group mainly focused in North, West and Eastern regions of India with a consolidated capacity of 12.5MT (FY17). JKLC reported a strong revenue growth of 24.8% for Q3FY18 aided by healthy growth in volumes at 15% YoY and 8% YoY growth in realisation. EBITDA grew by 14%YoY, however EBITDA margin declined by 100bps YoY to 11.3% due to steep increase in fuel and freight cost. JKLC commissioned 7.5MW WHR in Q3FY18 and is commissioning 20MW...

Background: JK Lakshmi Cements (JKLC) is a north Indian Cement player, established in 1982. JKLC has clinker units in Sirohi, Rajasthan and grinding units in Rajasthan, Gujarat and Haryana. The current clinker capacity is 6.2 MTPA and cement capacity is 10.9 MTPA. JKLC derives sales volume from the northern and western regions. The company has market share of ~6-7% in the northern region and ~9-10% in western regions. JKLC is on the spree of capacity expansion; recently...

Subdued cashflow and return ratios outlook intact; SELL JK Lakshmi Cement (JKLC) delivered 25%/14%/13% standalone revenue/EBITDA/PAT growth in Q3FY18. Ramp-up in east buoyed volume growth to 15% YoY. However, high energy and freight cost inflation amid lack of operating leverage gains offset realisation benefits, leading to subdued EBITDA of Rs447/MT. We maintain our anticonsensus SELL on the stock with a revised TP of Rs340, as we see (1) volume growth tapering off to 2% CAGR during FY19/20, (2) subdued operating cashflow to mute...

JKLC's volume grew 15% YoY (+12%QoQ) to 2.11mt v/s our estimate of 2.02mt, led by ramp-up of new capacity in east. Realizations rose 9% YoY (-3.4% QoQ) to INR3,969/t, lower than our estimate of INR4,259/t, due to weaker pricing in focus regions. Revenue grew 25% YoY (+8% QoQ) to INR8.4b (est. of INR 8.6b). EBITDA grew 14%YoY (-1% QoQ) to INR943m v/s estimate of INR1.2b (margin: 11.3%, -1.05ppYoY, -1.02pp QoQ), translating into EBITDA/ton of INR447 (flat YoY, -INR58/t QoQ) v/s estimates of INR576/t. Tax rate was 32.5% in 3Q v/s tax inflow ofINR27m. Net profit stood at INR86m (+13% YoY) v/s estimate of INR301m

JK Lakshmi Cement reported a mixed set of Q3FY18 numbers. While revenues were in line with our estimates, margins, PAT stayed below our estimates. Revenues increased 24.8% YoY to | 837.4 crore (vs. Idirect estimate of | 828.8 crore) mainly led by 15% YoY increase in volumes to 2.1 MT (vs. I-direct estimate of 2.0 MT) driven by healthy demand in company's key markets. Realisation increased 8.5% YoY to | 3,983/tonne (vs. I-direct estimate of | 4,095/t) On the margin front, the EBITDA margin declined 105 bps YoY to 11.3% (below I-direct estimate of 12.1%). EBITDA/tonne declined...

Operational performance: Average realization was up Rs 120/ton QoQ at Rs 4,070/ton (flat QoQ adjusted for freight cost). The realization is good as (1) Q2 is a seasonally weak quarter both in terms of volumes and cement prices

Background: JK Lakshmi Cements (JKLC) is a north Indian Cement player, established in 1982. JKLC has clinker units in Sirohi, Rajasthan and grinding units in Rajasthan, Gujarat and Haryana. The current clinker capacity is 6.2 MTPA and cement capacity is 10.9 MTPA. JKLC derives sales volume from the northern and western regions. The company has market share of ~6-7% in the northern region and ~9-10% in western regions. JKLC is on the spree of capacity expansion; recently...

Stable quarter; cost saving initiatives to benefit in FY19 For 2QFY18, JK Lakshmi reported volumes in line with our estimates at 1.89MnT, +10% YoY, primarily on higher capacity vs. the base quarter. Realisations rose 8% YoY (sequential growth of 3.5%) primarily on a change in the sales pattern from Ex works to FOR. EBITDA/t at INR 505/t declined 7.4% YoY as the rise in power/fuel and freight costs more than offset realisations growth. It commissioned 7.5MW of WHR at its Durg unit, benefits of which would be seen going forward (c.INR 50/t in east). In addition, management expects c.INR 200/t cost saving from 20MW captive thermal power plant (4QFY19 commissioning). In the...

JK Lakshmi Cement reported a mixed set of Q2FY18 numbers. While revenues were above our estimates, margins and PAT remained below our expectations. Revenues increased 18.5% YoY to | 776.7 crore (below I-direct estimate of | 719.4 crore) led by 10% YoY increase in volume to 1.9 MT (vs. I-direct estimate of 1.9 MT) mainly due to healthy demand in the company's key markets. Realisation increased 7.7% YoY at | 4,110/t (vs. I-direct estimate of | 3,868/t) EBITDA/tonne fell 7.4% YoY to | 505/tonne (vs I-direct estimate of |...