SBICap Securities
JK Lakshmi Cement (Hold)
CMP: ₹250.45
Target: ₹228
JK Lakshmi Cement’s 1QF15 operating performance (adjusted) was ahead of our expectations as realisation jumped strongly by 20 per cent y-o-y to ₹3,878/tonne even as cement volume growth was around 10 per cent less than expected. Ready-mix cement revenues too jumped by 20 per cent y-o-y to ₹42 crore. Buoyant prices in the operating regions of JKLC, North and West India, caused realisations to rise. Consequentially sales revenue jumped a healthy 21 per cent y-o-y to ₹600 crore (SBICap estimate ₹590 crore). The adjusted EBITDA too rose strongly by around 84 per cent y-o-y to ₹130 crore (SSLe of ₹114 crore) due to lower-than-expected cost inflation. However, the margins gain was limited to 160 bps q-o-q (17.3 per cent in 4QF14). Adjusted PAT ended with gains of 227 per cent y-o-y to ₹51.4 crore. We value JKLC on the replacement cost basis with base cost assumption of ₹750 crore/tonne. We are valuing JKLC by assigning 40 per cent discount to the replacement cost. We have arrived at the revised target price of ₹228 (₹170 earlier) based on 1-year forward capacities.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.