Buy JK Lakshmi Cement, target price Rs 825: Axis Securities

Axis Securities has buy call on JK Lakshmi Cement with a target price of Rs 825.The current market price of JK Lakshmi Cement is Rs 787.

JK Lakshmi Cement, incorporated in the year 1938, is a Mid Cap company (having a market cap of Rs 9214.15 Crore) operating in Cement sector.

JK Lakshmi Cement key Products/Revenue Segments include Cement, Others and Other Operating Revenue for the year ending 31-Mar-2022.

Financials
For the quarter ended 30-09-2022, the company has reported a Consolidated Total Income of Rs 1393.15 Crore, down -16.13 % from last quarter Total Income of Rs 1661.05 Crore and up 13.60 % from last year same quarter Total Income of Rs 1226.38 Crore. Company has reported net profit after tax of Rs 61.79 Crore in latest quarter.

The company’s top management includes Mr.Bharat Hari Singhania, Mrs.Vinita Singhania, Mr.B V Bhargava, Dr.Raghupati Singhania, Mr.N G Khaitan, Mrs.Bhaswati Mukherjee, Dr.K N Memani, Mr.Ravi Jhunjhunwala, Mr.Arun Kumar Shukla. Company has S S Kothari Mehta & Co as its auditors. As on 30-09-2022, the company has a total of 12 Crore shares outstanding.

Investment Rationale
The brokerage is of the view that cost pressure is likely to moderate with softening in commodity prices and the positive impact of the same will be reflected in the upcoming quarter. Moreover, Axis Securities believes the cement demand in the country will remain buoyant backed by higher infra and housing spending by the government along with robust real estate demand.

For the cement company, the brokerage estimates Revenue/EBITDA/APAT CAGR of 16%/18%/15% respectively over FY22-FY24E. Stock is currently trading at 10x and 7.5x FY23E/FY24E EV/EBITDA which is attractive.

Promoter/FII Holdings
Promoters held 46.31 per cent stake in the company as of 30-Sep-2022, while FIIs owned 12.14 per cent, DIIs 24.64 per cent.