'Buy' JK Cement Shares Maintains Motilal Oswal — Here's Why

Motilal Oswal reiterates Buy rating on JK Cement with a target price of Rs 7,250

 JK Cement’s stock performance has played out broadly in line with expectations, reflecting its strong track record of consistent operational delivery and disciplined execution.

(Representative image. Source: Envato)

JK Cement saw re-rating in FY22, and started trading at average EV/Ebitda (one-year forward) of 17 times. Re-rating in the stock is attributable to its expanded operations, strong execution capabilities, and cost-reduction initiatives.

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Motilal Oswal Report

We estimate JK Cement Ltd. to generate a cumulative operating cash flow of Rs 81.0 billion during FY26-28, and its cumulative capex would be Rs 48.0 billion over the same period. Given the strong cash flow generation and low-cost expansions (capex cost stood at $60-70/tonne), we believe its net debt will peak out in FY26E at Rs 42 billion.

Further, its net debt-to-Ebitda ratio would decline to <1.0x in FY28E from 2.0x in FY25. We estimate its RoE/RoCE (post-tax) to improve to ~19%/13% in FY27 from ~13%/10% in FY25.

JK Cement saw re-rating in FY22, and started trading at average EV/Ebitda (one-year forward) of 17 times. Re-rating in the stock is attributable to its expanded operations, strong execution capabilities, and cost-reduction initiatives.

We believe JK Cement is best-placed among mid-size cement companies with a pan-India presence.

Our Ebitda estimates for FY26/FY27/FY28 are higher by ~4%/1%/5% than the consensus estimates for JKCE. It is currently trading at 19x/16x FY26/FY27E EV/Ebitda and EV/T of $185/$180.

We value JK Cement at 18x Jun’27E EV/Ebitda (premium to its long-term average) to arrive at a target price of Rs 7,250. We reiterate our Buy rating on the stock.

Click on the attachment to read the full report:

Motilal Oswal JK Cement Company Update.pdf
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