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Anand Rathi
JK Cement (Buy)
CMP: ₹394.45
Target: ₹575
Strong, 22 per cent/43 per cent and 10 per cent/28 per cent, y-o-y growth in white cement/ wall putty volumes in FY13 and FY14 respectively has enabled a rise in JK Cement’s market share. It expects the strong growth momentum to continue. We estimate a 9 per cent/16 per cent CAGR over FY14-17 backed by strong brand equity and a high market share (40 per cent). The new 3-million tonne grey cement project in Rajasthan coupled with improved demand in South-West is expected to result in a 17 per cent volume CAGR over FY14-17. JK Cement’s 0.6-million tonne plant in Fujairah, the UAE, was fully operational in March with first dispatch on March 3. It is expected to operate at about 50 per cent utilisation in FY15 and gradually ramp up. JK Cement is strengthening its ultra system product (USP) of being a multi-region, multi-product operator, even as it grows its capacities and improves return ratios. Risk. Lower cement prices.
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