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Axis Securities
JK Cement (Buy)
Target: ₹2,150
CMP: ₹1,912.35
A leading cement manufacturer in the country, JK Cement Ltd, is an affiliate of the multi-disciplinary industrial conglomerate JK Organisation, which was founded by Lala Kamlapat Singhania. The company has over four decades of experience in cement manufacturing. Today, JK Cement has an installed grey cement capacity of 7 million tonne per annum (mntpa) and white cement and wall putty capacity of 2.4 mntpa. The company is the second largest manufacturer of white cement in India.
JK Cement has expanded its capacity by 40 per cent from 10.47 mntpa to 14.7 mntpa and all the extended capacities are ramping up gradually. With the coming up of new capacities, the company has the opportunity to capture further market share in its key market of Northern India and also gain in the lucrative central India market.
With the expansion of existing capacity, 80 per cent of grey cement capacity will be now fuel efficient, bringing significant changes in cost/tonne. White cement and wall putty business contributes around 30 per cent to overall revenue, with high Ebitda margin ranging between 26 and 28 per cent. We expect white cement business to grow at a CAGR of 10 per cent over the period FY21E-23E.
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