Buy JK Lakshmi Cement, target price Rs 370: ICICI Securities

ICICI Securities has given a buy rating to JK Lakshmi Cement with a target price of Rs 370. The share price moved down by 0.62 per cent from its previous close of Rs 284.55. The stock’s last traded price is Rs 282.80 .
JK Lakshmi Cement’s (JKLC) consolidated EBITDA grew 75% YoY to Rs 8 billion in FY20 with EBITDA/te nearly doubling to Rs794/te led by better prices in the North. Profitability of East operations could improve with the recent commissioning of grinding unit at Odisha and lower clinker sales. Besides, the company has reduced its net debt by Rs6.5bn over past three years to Rs15bn in FY20.

Investment Rationale
The brokerage said given the likely stability in North prices owing to higher utilisation, JKLC could generate OCF of Rs 5 billion p.a., which would be sufficient for future expansion. Accordingly, net debt is unlikely to increase meaningfully over the next 2-3 years. The brokerage maintains BUY with target price unchanged at Rs 370/share, based on 7x FY22E EV/E.

Financials
For the quarter ended 31-03-2020, the company has reported a Consolidated sales of Rs 1137.47 Crore, up 5.52 % from last quarter Sales of Rs 1077.92 Crore and down -11.09 % from last year same quarter Sales of Rs 1279.33 Crore Company has reported net profit after tax of Rs 98.63 Crore in latest quarter.

Promoter/FII Holdings
Promoters held 46.2 per cent stake in the company as of March 31, 2020, while FIIs held 11.5 per cent and public and other 24.2 per cent.