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Anand Rathi
JK Lakshmi Cement (Buy)
Target: ₹380
CMP: ₹282.50
The lockdown hit JK Lakshmi’s Q1 performance. Its revenue/ EBITDA/PAT fell 21 per cent , 15.6 per cent and 36 per cent respectively. The high Covid-impacted West and frequent local lockdowns in the East pushed cement volumes down 18 per cent y-o-y.
The management’s focus on de-levering continues; it is keeping on hold its expansion in the North. The East and West continue to suffer from cities being locked down; pockets in the North are also locked down. The migrant labour issue resolution, firm prices, ris i ng institutional demand, fixed-cost savings and the 10MW WHRS at Sirohi will help its performance.
The management is still keeping its proposed 2.5 mt capacity expansion in the North on hold.
The ramping-up of its Cuttack GU suffered from the lockdown. Gross debt (standalone) was ₹1,500 crore as against ₹120 crore debt, the company availed of the moratorium, and talked about repaying ₹200 crore debt each in FY21 and FY22.
We retain our Buy call, with a ₹370 target (₹325 earlier).
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