JK Lakshmi Cement Ltd. share price target

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 8.3 MTPA. JKLC derives sales volume from the northern and western regions. The company has 5.3% share of dispatches in the northern and western regions. JKLC is on the spree of capacity expansion;...

JK Lakshmi Cement's Q3FY17 numbers were above our estimates. Revenues increased 3.5% YoY to | 670.9 crore (above I-direct estimate of | 616.6 crore) led by 3.8% YoY increase in volumes to 1.83 MT (above I-direct estimate of 1.65 MT) mainly due to higher utilisation at the Durg plant (up from 73% to 93% in Q3FY17) and...

JK Lakshmi Cement (JKLC) has reported a better-than-expected operating performance in 3QFY17. JKLC's EBITDA grew by 22% YoY to Rs0.83bn vis--vis our estimate of Rs0.63bn primarily attributable to better-than-estimated sales volume, which stood at 1.83mnT (+4% YoY and +6.5% QoQ). Operating cost/tonne declined by ~2.5% YoY and ~1.7% QoQ mainly on account of significant reduction in raw material cost/tonne and other expenditure/tonne. However, power and fuel cost/tonne surged by 2% QoQ due to increase in petcoke prices. Further, freight cost/tonne also increased by 1.8% YoY and 1.6% QoQ. Average net realization declined by 0.4% YoY...

Q2FY17 EBITDA at Rs 937mn was largely in-line with our estimates of Rs 914mn. Though, volume de-growth of 1.8% YoY (due to heavy rains) was below our estimate of 14% growth, margins were better than estimates (EBITDA/ton at Rs 545/t vs. estimate of Rs 457/t) on account of better realisation (+3.6% QoQ vs. estimate of +1% QoQ).

Following a strong volume growth in last five quarters, JKLC sales volume remained subdued in 2QFY17 (-2% yoy & -19% qoq) mainly due to seasonal overhang. Volume from Northern plants dipped 9.5% yoy to 1.37mnT, while volume from Durg plant rose...

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 8.3 MTPA. JKLC derives sales volume from the northern and western regions. The company has 5.3% share of dispatches in the northern and western regions. JKLC is on the spree of capacity expansion;...

Low cost pet coke inventory drives margins Jk Lakshmi Cement's Q2FY17 result is not directly comparable due to adoption of new accounting standard (IND AS). Under IND AS the company has reported sales including excise duty i.e | 733.1 crore. After adjusting for excise duty, the company's revenues increased 1.5% YoY to | 655.6 crore (below I-direct estimate of | 767.6 crore)...

JKLC’s operating performance was better than expected driven by better realisations. Exit from capex mode also visible and all capacities likely to be on stream by end of H1FY18. Given that realisation improvement sustains, possibilities of upgrades cannot be ruled out.At the price target, the stock will trade at a valuation of ~US$ 90/tonne. Fundamentals appear strong and if cement prices sustain, potential for recovery in earnings upgrade exists.

JK Lakshmi Cement's Q1FY17 numbers were above our expectations. Revenues in Q1FY17 increased 31.6% YoY to | 777.2 crore (above I-direct estimate of | 683.8 crore) led by 27.7% YoY increase in volumes (due to a pick-up in demand and 100% capacity utilisation of new Durg capacity). Further, realisation in the quarter...