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HDFC Securities Institutional Equities
We maintain our Buy rating on JK Lakshmi Cement Ltd. with an unchanged target price of Rs 1,015/share. We value the company at nine times Sep-26E consolidated Ebitda. We expect JK Lakshmi to fire on all cylinders. The ramp-up of its north expansion and upcoming east capacities should support ~10% volume CAGR during FY24-27E.
The company's tight focus on geo-mix optimisation, increasing consumption of green energy (power and fuel), focus on lead distance reduction and digital adoption are further supporting its healthy margin outlook.
Cool-off in the fuel prices should also drive margin expansion. We estimate JK Lakshmi to deliver 10/15/13% consolidated volume/Ebitda/adjusted profit after tax compound annual growth rates during FY24-27E.
Well-paced out expansions mainly in the eastern region should keep its net debt to Ebitda under two-times, even as JK Lakshmi Cement's consolidated capacity should grow to 24 million metric tonne by early FY28E.
Given its healthy expansion and growth outlook, JK Lakshmi Cement is poised to see valuation multiple rerating in the coming years, in our view.
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