'Buy' JK Lakshmi Cement Maintains HDFC Securities, Sees Positive Growth Prospects On Volume, Margin

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HDFC Securities Institutional Equities

We maintain our Buy rating on JK Lakshmi Ltd. with an unchanged target price of Rs 872/share (nine times FY27E consolidated Ebitda), post our interaction with the management. After a flattish FY25, we estimate JK Lakshmi Cement’s volume growth to accelerate to 9% CAGR during FY25-27E on the ramp-up of its north expansion.

The company has launched a brand enhancement exercise and is also beefing up its green energy infrastructure along with a further reduction in lead distance. Falling fuel prices are also expected to further cushion the margin compression (from poor pricing) in FY25 and add to margin recovery from FY26 onwards.

Subsequently, we estimate unit Ebitda to rebound from a six-year low of Rs 648 per metric tonne in FY25E to Rs 863/968 per mt in FY26/27E. Ongoing expansions should lead to consolidated capacity increasing to 22.5 million metric tonne by FY28 (from 16.5 mnmt in FY24).

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