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 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...

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...

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...

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...

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.

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.