Motilal Oswal's research report on J K Cement
J K Cement (JKCE)’s 2QFY23 operating performance was largely in line, with standalone EBITDA at INR3b (est. INR2.9b) and EBITDA/t at INR814 (est. INR785). Adjusted PAT (adjusted for additional depreciation on CPP) was at INR1.4b v/s our estimate of INR1.2b. As expected, JKCE announced grinding capacity expansion of 5.5mtpa (with capex of INR11.6b i.e. capex/t of USD26). Clinker requirements of these plants will be met through existing capacities. We raise our FY23E/FY24E consolidated EBITDA/EPS by 3-4% given better profitability. We maintain our BUY rating on the stock, valuing white/grey cement at 14.5x/13.5x Sep’24E EV/EBITDA, respectively.
Outlook
We value the Grey cement business at 13.5x Sep’24E EV/EBITDA. We estimate competitive intensity to ebb in white cement business and we value this at 14.5x Sep’24E (v/s 13.5x earlier). We maintain our BUY rating with a revised TP of INR3,370 (up from INR3,170 earlier).
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