JK Cement, Best-Placed Midcap Cement Company With A Pan-India Presence, Says Motilal Oswal Maintaining 'Buy'

JK Cement re-rated in FY21 and has been trading in the range of 12-20x EV/Ebitda (one-year forward). The re-rating is attributed to the company’s expanded operations, strong execution capabilities, and cost reduction initiatives. We believe JK Cement is best-placed among mid-sized cement companies with a pan-India presence. .NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .We estimate JK Cement Ltd.'s consolidated revenue/Ebitda/PAT CAGR at 15%/21%/33% over FY25-27, driven by robust volume growth and profitability improvement. We anticipate the company’s consol. volume to report ~13% CAGR over FY25-27 and operating profit margin to expand 1.7pp to ~18% by FY27. We estimate its Ebitda/tonne at Rs 1,070/ Rs 1,120 in FY26/FY27 versus Rs 980 in FY25 (average Rs 1,070 over FY20-25). We estimate JK Cement to generate a cumulative operating cash flow of Rs 63.6 billion over FY25-27, with cumulative capex expected to be Rs 52.0 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 45.0 billion. Further, we anticipate its RoE/RoCE (post tax) to improve to 18%/14% in FY27 from 13%/10% in FY25E. .JK Cement re-rated in FY21 and has been trading in the range of 12-20x EV/Ebitda (one-year forward). The re-rating is attributed to the company’s expanded operations, strong execution capabilities, and cost reduction initiatives. We believe JK Cement is best-placed among mid-sized cement companies with a pan-India presence. We value JK Cement at 16x FY27E EV/Ebitda (similar to its five-year average one-year forward EV/Ebitda) to arrive at our target price of Rs 6,000. We reiterate our Buy rating on the stock..Click on the attachment to read the full report:.'Buy' Glenmark Pharma Maintains Motilal Oswal Citing Growth Potential, Valuation; Sees 26% Upside.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

JK Cement, Best-Placed Midcap Cement Company With A Pan-India Presence, Says Motilal Oswal Maintaining 'Buy'

JK Cement re-rated in FY21 and has been trading in the range of 12-20x EV/Ebitda (one-year forward), adds the brokerage.

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