JK Cement reports 38% y-o-y growth in net profits

MUMBAI: Similar to its peers, JK Cement reported a healthy growth in earnings on the back of both higher volumes and realizations. In June 2012 quarter, the company reported a robust 38% y-o-y growth in net profits.

In the quarter ending June 2012, JK Cement's revenues grew by 21% y-o-y to Rs 736 crore. This was mainly due to 15% growth in dispatch volumes and 5% increase in realization per ton.

However, on a sequential basis, dispatch volumes were lower by 11% in comparison to March 2012 quarter. The company was able to achieve higher volumes on y-o-y basis due to a weak monsoon that led to an increase in construction activity.

However, it would be difficult for the company to maintain the 7% growth in volumes in the coming quarters. For a pick up in demand, a lot would depend on the revival of infrastructure and real estate structure. One of the key triggers for the revival would be the softening of interest rates.

At current market price of Rs 232, the stock is trading at an Enterprise Value (EV) per ton of $65. This is in line with its similar sized peers, which are trading at an EV/ton of nearly $60.