Buy JK Lakshmi Cement; target of Rs 855: HDFC Securities

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HDFC Securities' research report on JK Lakshmi Cement

We remain positive about the company for its focus on improving geo-mix, increasing trade sales, increasing green energy share, and optimisation of the supply chain. These should boost margin and profitability. Its ongoing brownfield expansion in Udaipur is broadly on track, to be commissioned by Q1FY25E (18% capacity increase), and is not stretching the balance sheet. In Q3FY23, JKLC reported strong 10/14% YoY/QoQ cement volume growth. Unitary EBITDA, however, came in flat QoQ (INR 644/MT) as higher fuel and freight costs QoQ negated op-lev gains. JKLC expects a flattish fuel cost QoQ in Q4FY23E but it is expected to fall Q1FY24E, as its high-cost inventory gets over.

Outlook

We maintain our BUY rating on JK Lakshmi Cement (JKLC) with an unchanged target price of INR 855/share (8x Mar-25E consolidated EBITDA).

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JK Lakshmi Cement - 14 -02 - 2023 - hdfc