Buy JK Lakshmi Cement, target price Rs 630: ICICI Securities

ICICI Securities has buy call on JK Lakshmi Cement with a target price of Rs 630. The current market price of JK Lakshmi Cement is Rs 438.55. Time period given by analyst is one year when JK Lakshmi Cement Ltd. price can reach defined target.

JK Lakshmi Cement Ltd., incorporated in the year 1938, is a Mid Cap company (having a market cap of Rs 5165.72 Crore) operating in Cement sector.

JK Lakshmi Cement Ltd. key Products/Revenue Segments include Cement, Others and Other Operating Revenue for the year ending 31-Mar-2022.



Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 1661.05 Crore, up 2.81 % from last quarter Total Income of Rs 1615.66 Crore and up 23.74 % from last year same quarter Total Income of Rs 1342.36 Crore. Company reported net profit after tax of Rs 115.08 Crore in latest quarter.

Investment Rationale
JK Lakshmi Cement’s (JKLC) Q1FY23 standalone EBITDA of Rs2.17bn (flat YoY) was in line with our / consensus estimates. Volumes, including clinker sales, rose 5% YoY (fell 11% QoQ) while total cost/te increased sharply 25%/23% YoY/QoQ owing fuel cost inflation. The cost inflation was largely offset by rise in blended realisation, which grew 20%/17% YoY/QoQ – significantly higher than expected. As a result, standalone EBITDA/te declined by a meagre 4%/11% YoY/QoQ to Rs779/te (I-Sec: Rs708/te), while consolidated EBITDA/te stood at a healthy Rs847/te (vs Rs917/te in Q1FY22). Factoring-in the better realisations, the brokerage marginally raises FY23E-FY24E EBITDA by 4-5% and raise the target price to Rs630/sh (earlier: Rs600/sh), based on 7x FY24E EV/E. Valuations at <US$55/te or ~5xFY24E EV/E is attractive, in our view. Key risks: lower demand / prices, and higher costs.

Promoter/FII Holdings
Promoters held 46.31 per cent stake in the company as of 30-Jun-2022, while FIIs owned 12.14 per cent, DIIs 25.21 per cent.