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Hold JK Cement; target of Rs 2600: Emkay Global Financial

Emkay Global Financial recommended hold rating on JK Cement with a target price of Rs 2600 in its research report dated August 16, 2022.

August 18, 2022 / 06:42 PM IST
 
 
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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.

For all recommendations report, click here

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JK Cement - 170822 - emkay

Broker Research
first published: Aug 18, 2022 06:42 pm

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