Target: ₹2,575

CMP: ₹2,942.65

JK Cement reported an EBITDA that was slightly higher than our estimate due to higher-than-expected volumes.

Grey cement sales volume (including clinker) was up by a healthy 10 per cent y-o-y (+2 per cent q-o-q ), at 3.22 mt, marginally higher than our estimate of 3.1 mt. Grey cement realisation was up by 5 per cent y-o-y (down 7 per cent q-o-q ) to ₹5,838/tonne.

EBITDA/tonne at ₹815 fell 18 per cent y-o-y (28 per cent q-o-q), as against our estimate of ₹823.

White cement sales volume including that of wall putty was at 0.42mn tonnes which increased by 7.6 per cent y-o-y (+7.9 per cent q-o-q), while realisation stood at ₹12,648/tonne.

Adj. PAT stood at ₹125 crore (-26 per cent y-o-y and -31 per cent q-o-q), higher than our estimate of ₹104 crore.

We lower our EBITDA estimates by 5 per cent/4 per cent for FY23/FY24. As the stock has witnessed a run-up of more than 45 per cent since its June’22-low leading to its higher valuation coupled with margin pressures and lower realisation, we downgrade the stock to Sell from Hold , with a revised SOTP target price of ₹2,575 (from ₹2,750).

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