JK Lakshmi Cement Ltd. share price target

JKLC reported Q1FY22 revenue growth of 49%YoY (-6.8%QoQ) supported by volume growth of 39%YoY along with 7% YoY growth in blended realisation and low base (21% in Q1FY21). Value added products including RMC revenue was Rs.78cr (Rs.95cr QoQ/ Rs.29cr YoY) and the company is targeting Rs.500cr from this segment. Given GoI's strong focus on infra & housing, we expect demand to pick up in H2FY22 despite near-term uncertainties due to Covid-19. Factoring better than expected volume...

We recommend a BUY on the stock with a target price of Rs 750/share

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 11.5 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...

Led by steep increase in prices across its markets, JKLC's EBITDA/t doubled since FY19 to ~Rs900/t (adj. for trading operations). However, it remained well below its peers due to higher clinker sales and focus on higher lead distance markets. Given its overdependence on prices, we believe that margins for the company would remain capped due to significant cost pressures, limited scope for cost reduction and high lead distance. With margins trending lower to Rs800/t and limited avenues to contain the cost headwinds, we believe that re-rating in valuations (from 5x to 8x over last six months) capture the...

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 11.5 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...

JKLC reported revenue growth of 25%YoY aided by 17.6%YoY growth in volumes (better than industry) and 6% YoY growth in blended realisation amid challenging conditions. Value added products including RMC revenue was Rs.95cr Vs Rs.91cr QoQ and the company is targeting Rs.500cr from this segment. Given GoI's strong focus on infra & housing, we expect demand to pick up in H2FY22 despite near-term uncertainties due to Covid-19 second wave. Factoring better than expected volume...

We retain our BUY rating on the stock. We roll over our estimate to FY23E and value the company at 7x FY23E EV/EBITDA (6.5x earlier), to arrive at a target price of Rs.590/share, implying an upside of 19% from CMP.

EBITDA grew 33% YoY to INR2.7b in 4QFY21 (34% above our estimate), led by 3% QoQ increase in realization and 2% QoQ decline in cost per tonne. We have raised our FY22E/FY23E EPS estimate by 23%/22% to factor in accelerated deleveraging, which should drive 15% EPS CAGR over FY21-23E. We reiterate our Buy rating on attractive valuations (6.5x FY22E EV/EBITDA) as well as growth optionality from the announced 2.5mtpa expansion in North India through its subsidiary Udaipur Cement Works (UCWL)....

JK Lakshmi Cement operated at full capacity in Q4 with 101% capacity utilisation led by improved sales volume from both retail & infra segment. Total sales volume grew 17.6% YoY to 2.9 MT. Realisation was also up 5.9% YoY, 3.0% QoQ to | 4,559/tonne (vs. I-direct estimate: | 4,413/t). This led to revenue growth of 24.6% YoY to | 1,322 crore (vs. I-direct estimate: 1,226.2 crore). EBITDA margins came in at 20.3% (vs. I-direct estimate: 14.8%) and EBITDA/tonne of | 924/tonne, ahead of our estimated EBITDA/t of | 653/t despite 4.3% YoY increase in costs. After accounting for impairment loss of...

JKLC reported revenue growth of 19%YoY aided by 14%YoY growth in volumes (better than industry) and 4% YoY growth in blended realisation amid challenging conditions. Value added products including RMC revenue was Rs.91cr Vs Rs.76cr YoY and the company is targeting Rs.500cr this year from this segment. Given GoI's strong focus on infra & housing, we expect demand to pick up in FY22. Factoring better than expected volume growth in the quarter, we increase our volume assumptions and expect revenue to grow by 7%CAGR over FY20-23E. Sharp increase in fuel price likely to impact margins...