JK Cement Shares Upgraded To 'Buy' By Nirmal Bang Post Q2 Results; Sees 25% Upside — Check Target Price

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Nirmal Bang Report

JK Cement Ltd. is expected to deliver robust earnings growth over the medium term with revenue, Ebitda, and PAT projected to clock a CAGR of 17%, 26%, and 44%, respectively, during FY25-FY27E. Ebitda/tonne is estimated to improve from Rs 1,106 in FY26E to Rs 1,292 in FY27E, driven by multiple cost optimization initiatives.

The company is actively working to improve cost efficiency through increased use of green power and a 10% improvement in the thermal substitution rate, along with a 15 km reduction in lead distance. These initiatives are expected to result in cost savings of Rs 150-200/tonne over the next two years.

Net debt-to-equity is projected to improve from 0.65x in FY26E to 0.56x in FY27E, indicating strengthening balance sheet health. Return ratios are also set to improve with RoE estimated to rise to ~19.5% and RoCE (post-tax) to ~16.6% by FY27E, up from ~15% and ~14%, respectively, in FY25—reflecting superior operating leverage and better capital efficiency.

Given its expanding scale, strong execution capabilities, and ongoing cost rationalization measures, we maintain the target valuation multiple at 15.4x Sep-27E EV/Ebitda, slightly below its five-year historical average of 16x.

This results in a target price of Rs 7,238. The stock has corrected ~23% in the last 3 months leading to an upside of 25%, hence, we upgrade the stock to a Buy.

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