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Neutral JK Cement; target of Rs 3069: Choice Equity Broking

Choice Equity Broking recommended Neutral rating on JK Cement with a target price of Rs 3069 in its research report dated November 17, 2022.

November 18, 2022 / 03:42 PM IST
 
 
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Choice Equity Broking's report on JK Cement

JK Cements’ Q2FY23 standalone volumes stood at 3.64mnt (up 9% YoY and up 2% QoQ). Blended realization/t for Q2FY23 came in at INR 5,878 (up 7% YoY though down 3% QoQ) as a result of rising total costs. Higher cost pressures led to a drop in EBITDA margins to 13.9% (down 407bps YoY and down 462bps QoQ). Utilization dropped slightly but operational factors seem steady: During Q2FY23, JKCE operated at 84% utilization. The Trade Mix during Q2FY23 stood at 69:31 (up 3% YoY). Green power mix stood at 43% in H1FY23 as against 32% in FY22 and thermal substitution rate stood at 11.2% in H1FY23 as against 9% in FY22. Premium product sales stood at 9% (up 3% YoY) of trade sales. Rail road mix stood at 19:81. Lead distance for current quarter stood at 477kms v/s 473kms last quarter.


Outlook

We have estimated an EBITDA CAGR of ~10% upto FY25E, keeping in mind the possibility of sustained cost inflationary pressure. JKCE is currently available at 13.2x of our FY25 EBITDA estimates, and is at a premium of 1% to our target EV EBITDA multiple of 13x. We ascribe a target price of INR 3,069 and attribute a NEUTRAL rating to the stock.

For all recommendations report, click here

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JK CEMENT - 18-11-2022 - choice

Broker Research
first published: Nov 18, 2022 03:42 pm

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