JK Lakshmi Cement Q4 Results Review - Lower Costs Drive Beat; Capacity Expansion On Track: Motilal Oswal

Motilal Oswal Report

JK Lakshmi Cement Ltd.’s Q4 FY24 operating performance was above our estimates, with consolidated Ebitda at Rs 3.4 billion (up 45% YoY; 14% above our estimate). Ebitda/tonne increased 43% YoY to Rs 1,032 (estimate Rsa 852). Operating profit margin was up 6.4pp YoY to ~19%. Adjusted profit after tax grew 43% YoY to Rs 1.6 billion (estimate: Rs 1.4 billion).

The management indicated that cement volume growth (consolidated) of ~1% in Q4 was on a lower side due to lower volumes from outsourced units. The company’s expansion plans are on track. It will commission grinding capacity of 1.35 mtpa at Surat grinding unit in FY25 and Durg (Phase – I) expansion by FY26-end.

Further, in the northeast region, JK Lakshmi Cement is in the process of land acquisition and getting external approvals such as environment clearance, etc. After this process, it will take two years to set up the cement plant.

We largely maintain our Ebitda estimates for FY25/FY26. JK Lakshmi Cement is trading at 7.5 times/6.0 times FY25E/FY26E enterprise value/Ebitda.

JK Lakshmi Cement is a cost-efficient player with a presence in favorable regions (Gujarat and North). We value JK Lakshmi Cement at nine times FY26E EV/Ebitda and arrive at a target price of Rs 1,000. Reiterate Buy.

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