JK Lakshmi Cement Ltd. share price target

We revise our target price to Rs.400/ from Rs.370/ earlier valuing the company at 6.5x FY22E EV/EBITDA, an upside of 14% from the current level.

Cost efficiency to improve further; maintain BUY! During Q3FY21, JK Lakshmi managed to sustain its margins on a YoY basis despite an increase in costs leading to a better-than-expected performance for Q3FY21. Revenue in Q3 grew 18.7% YoY to | 1192.8 crore (vs I-direct estimate: | 1121.3 crore). Plant utilisation was at 92% led by improved sales volumes that were up 15.7% YoY to 2.7 MT (vs. I-direct estimate: 2.6 MT). Realisations were also up 2.6% YoY to | 4,426/tonne (vs. I-direct estimate: | 4,356/t). This led to a margin expansion of 97 bps YoY to 16.1% (in line...

EBITDA grew 26% YoY in 3QFY21 to INR1.9b (8% above our estimate) driven by 16%/2% YoY growth in volume/realization. Costs rose 3% QoQ due to higher freight and other expenses. Control on costs holds the key to deliver consistent EPS growth. We maintain our FY2123E estimates and reiterate Buy on attractive valuations. EBITDA up 26% YoY led by 16% YoY growth in volume Revenue grew 19% YoY to INR11.9b on 16% growth in volume at 2.7mt (v/s...

JK Lakshmi Cement (JKLC) reported Q3FY21 EBITDA in line with our estimates. While, it beat consensus estimates (CE) by 15%. Strong profitability in North and Gujarat region helped to contain the weakness in Eastern region (30% of total volumes). Tight demand-supply market conditions would help sustain margins in North and Gujarat regions....

We recommend a BUY on JK Lakshmi Cement Ltd with a Target Price of Rs. 370, an upside of 8% from CMP of Rs. 343 and Stop Loss of Rs. 325.

JKLC reported revenue growth of 12%YoY mainly driven by volume growth of 16%YoY amid challenging conditions, which was better than industry (de-growth of ~11%YoY). However, blended realisation de-grew by 3.5% YoY. We expect gradual pickup in demand due to relaxation in restrictions and revival in economic activities. Factoring the strong volume growth in the quarter, we increase our volume assumptions and expect revenue to grow by 4%CAGR over FY20-22E. Lower fuel cost supports margins despite pressure on realisation EBITDA margin improved by 200bps to 17.9% mainly due to reduction in costs and...

The company reported healthy operating performance on the back of higher volume, better realization and cost control.The revenue/Ebitda/APAT grew by 12%/25% and 75% on YoY basis. The company recorded healthy EBITDA margin of 18% during the quarter driven by contraction in operating cost

Being a predominantly north (8.2 MT capacity) and central (3.5 MT capacity) player, the company has got a structural advantage of balanced supply and demand environment in these two high growing regions. Further, selfsufficiency in power, through captive power plant (CPP) of 54 MW, waste heat recovery (WHR) plant of 14 MW and solar power plant of 6 MW have helped the company to reduce reliance on costly grid power. The progress on the WHRS Unit-III project at Sirohi is as per schedule and will be commissioned by July 2021. In the eastern region, the company has a 7 MW WHR plant and has recently commissioned a CPP of 20 MW, to become selfsufficient. To increase penetration in the east and reduce freight costs, it has...

the weakness in Eastern region (24% of total volumes). Tight demand-supply market conditions would help sustain margins in North and Gujarat regions. East region would witness flooding of capacity addition over next couple of years. However, we do not expect further deterioration in region's margins due to unsustainable RoEs and industry consolidation. Commissioning of CPP, WHR and split grinding unit at Odisha further boosted the cost competitiveness of its East operations. To factor higher realisations and better growth in volumes, we upgrade our EBITDA estimates of FY21e/FY22e...

JKLC reported results above estimates on all fronts. JKLC posted 11.7%/ 25.6%/ 75.4% YoY growth in revenue/ EBITDA/ APAT to Rs10.4 bn/ Rs1.9 bn/ Rs806 mn in Q2FY21 led by 15.8% YoY...