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Elara Capital
JK Cement (Accumulate)
CMP: ₹960
Target: ₹1,045
JK Cement (JKCE IN) reported about 12 per cent y-o-y growth in net sales to ₹1,470 crore vs our and consensus estimates of ₹1,470 crore and ₹1,460 crore, respectively. However, improved realisation led to a about 54 per cent y-o-y jump in EBITDA to ₹280 crore vs our and consensus estimates of ₹270 crore and ₹250 crore, respectively, and expansion in EBITDA margin to 19 per cent vs 13.9 per cent in Q4FY18 and 16.7 per cent in Q3FY19. Reported PAT was up about 55 per cent y-o-y to ₹150 crore vs our and consensus estimates of ₹150 crore and ₹130 crore, respectively, on strong operating performance.
Volume growth remains steady at about 6 per cent y-o-y.
At a CMP, the stock trades at about an EV per tonne of $75 on FY21 capacity. We believe healthy performance will sustain led by an improved pricing scenario across regions and strong future volume growth post completion of ongoing expansions. Thus, we raise our earnings estimates by about 42 per cent for FY20 and introduce FY21 estimates. We reiterate ‘Accumulate’ with a new target price of ₹1,045 from ₹804 on FY21E EV per tonne of $90 vs earlier target multiple of $70.
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