Buy JK Lakshmi Cement, target price Rs 680: Axis Securities

Axis Securities has buy call on JK Lakshmi Cement with a target price of Rs 680. The current market price of JK Lakshmi Cement is Rs 581.9.

JK Lakshmi Cement, incorporated in the year 1938, is a mid cap company (having a market cap of Rs 6844.28 Crore) operating in cement sector.

Its key products/revenue segments include cement, others and other operating revenue for the year ended March 31, 2022.

Financials
For the quarter ended June 30, 2022, the company has reported a consolidated total income of Rs 1661.05 crore, up 2.81 per cent from last quarter total income of Rs 1615.66 crore and up 23.74 per cent from last year same quarter total income of Rs 1342.36 crore. Company has reported net profit after tax of Rs 115.08 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 30-06-2022, the company has a total of 12 Crore shares outstanding.

Investment rationale
H1FY23 will be impacted owing to elevated cost, H2FY23 will see the positive impact of lower commodity prices along with higher demand and realization.

The brokerage expects the company to deliver Revenue/EBITDA/APAT growth of 16%/11%/20/% CAGR over FY21-FY24E. Currently, the stock is trading at 7.5x and 6x FY23E and FY24E EPS.

It values the company at 7x FY24E EV/EBITDA to arrive at the TP of Rs 680/share, implying an upside potential of 18% from the current levels.

Promoter/FII Holdings
Promoters held 46.31 per cent stake in the company as of 30-Jun-2022, while FIIs owned 12.14 per cent, DIIs 25.21 per cent.