Emkay Global Financial's research report on JK Cement
JK Cement's Q1FY23 standalone EBITDA was flat YoY at Rs4bn, standing 14%/19% above consensus/our estimates owing to lower-than-expected increase in cost/ton. Accordingly, blended EBITDA/ton fell 15% YoY to Rs1,124 (Emkay Est: Rs945). Management mentioned that impact of the high-cost fuel inventory is likely to reflect in Q2 and profitability would sharply decline sequentially in Q2FY23. Over 50% of the equipment erection work and the entire civil work are complete at the 4mt green-field Panna plant; Mgmt expects to commission the project by Mar'23. This is likely to drive grey-cement volume CAGR of ~11% over FY22-25E.
Outlook
Factoring in the lower opex/ton, we raise FY24-25E EBITDA by 4% and TP to Rs2,600 (from Rs2,360) post the quarterly roll-over to Sep'23. Our DCF-based TP implies 1-year fwd EV/EBITDA of 11x. Maintain Hold, as the risk-reward appears to be balanced.
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