JK Lakshmi Cement Q2 Results Review - Better Quarter; Profitability To Improve: Dolat Capital
JK Lakshmi Cement reported numbers in line with our estimates.
BQ Prime’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 BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Dolat Capital Report
JK Lakshmi Cement Ltd. reported numbers in line with our estimates. The company on consolidated basis posted +14.6%/ -9% YoY/ QoQ growth in revenue to Rs 15.7 billion led by +13.8% YoY/ -10.2% QoQ growth in volume to 2.9 million tonne coupled with +0.7% YoY/ +1.3% QoQ in realisation/tonne to Rs 5,471.
Ebitda/adjusted profit after tax reported sharp growth of +32.5%/ 51.8% YoY to Rs 2.2 billion/ Rs 927 million.
Outlook and Valuation
JK Lakshmi Cement commissioned 1.5 million tonnes per annum clinker at its subsidiary Udaipur Cement Works Ltd. in October 2023; 2.5 mtpa grinding unit expected to start by March-April 2024 (versus earlier guidance of Q2 FY25) to capture growth in demand.
JK Lakshmi Cement has also announced 1.35 mtpa brownfield grinding unit expansion at Surat, Gujarat with capex of Rs 2.3 billion which is expected to start by H1 FY26. Thus, we factor higher net debt of Rs 14.2 billion/ Rs 12.0 billion/ Rs 8.0 billion for FY24E/ FY25E/ FY26E versus Rs 10.0 billion/ Rs 11.8 bn in FY23/ H1 FY24.
We factor improvement in profitability over FY23-26E.
Stock has run up by ~29% since last update note (July 28, 2023), hence we maintain 'Accumulate' with a revised target price of Rs 879 based on eight times consolidated FY26E enterprise value/Ebitda.
Key downside risk: Lower profitability versus our estimates
Click on the attachment to read the full report:
This report is authored by an external party. BQ Prime 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 BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.