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Arihant Capital
JK Cement (Hold)
CMP: ₹651.45
Target: ₹757
JK Cement Ltd reported about 5 per cent y-o-y growth in the revenue for the quarter ended September, while the net profit fell down by about 58 per cent y-o-y. For this quarter 2QFY16 company’s net sales were ₹868 crore, up by 4.8 per cent compared to ₹828 crore in the corresponding quarter last year and up by about 7 per cent quarter on quarter.
The company reported profit before depreciation, interest, tax and amortisation at ₹109 crore versus . ₹90 crore in the corresponding quarter last year, up by 20.3 per cent y-o-y and up by 24.4 per cent q-o-q, primarily due to the higher topline and reduced power and fuel costs.
However, the profit after tax for the company was at ₹13.7 crore, down by 58 per cent when compared to the corresponding quarter last year. The decrease in profit after tax was mainly dragged by the increase in finance costs.
Company having its total installed capacity of 10.5 MTPA for grey cement and 1.2 MTPA of white cement generates its revenues mainly from the northern and western belt of the country.
We have valued stock on EV/EBITDA of 17(x) its FY16 estimates and have arrived at a fair value of ₹757 a share.
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