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Systematix Research Report
JK Cement Ltd. delivered an excellent set of numbers that exceeded estimates on all fronts. The company's standalone revenue stood at Rs 27.8 billion (+19.0% YoY, +8.3% QoQ) versus our estimate of Rs 26.0 billion.
This growth was led by a sharp uptick in realisations and healthy growth in volumes. Total volume for the quarter stood at 4.7 million tonnes per annum (+16.6% YoY, 3.7% QoQ) vis a vis our estimate of 4.4 mtpa.
Grey cement volume stood at 4.15 mtpa (+14% YoY) while white cement volume grew to 0.42 mtpa (+10.5% YoY). Blended Realisation for the quarter came in at Rs 6,086 (+2.1% YoY, +4.5% QoQ).
Ebitda for the quarter more than doubled to Rs 6.1 billion vs our estimate of Rs 5.3 billion. Accordingly, Ebitda/tonne also improved significantly to Rs 1,330 led by cost savings in power and fuel, raw material, and other expenses.
Capacity utilisation for the quarter was 77%. Blended cement stood at 66% of the mix while trade sales constituted 62% of the total portfolio. The share of premium products stood at 12%.
JK Cement expects to bring the capacity to 30 mtpa by FY26 from the current 22 mtpa at a total capex of Rs 43 billion till FY26E.
We forecast a strong revenue/Ebitda/profit after tax compound annual growth rate of 14%/31%/40% over FY23-FY26E on the back of a consistent volume growth trajectory and sustained focus on expansion as well as operational efficiencies.
We roll over our estimates to FY26E valuing the company at 14 times enterprise value/Ebitda to arrive at a target price of Rs 4,630.
We maintain our stance with a 'Buy' rating on the stock.
Key downside risk: Unexpected delays in expansion, price roll backs, input cost pressures etc.
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