Buy JK Lakshmi Cement, target price Rs 780: HDFC Securities

HDFC Securities has buy call on JK Lakshmi Cement with a target price of Rs 780. The current market price of JK Lakshmi Cement is Rs 638.05. 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 7501.47 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-2021.



Financials
For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 1226.38 Crore, down -8.64 % from last quarter Total Income of Rs 1342.36 Crore and up 6.68 % from last year same quarter Total Income of Rs 1149.60 Crore. Company reported net profit after tax of Rs 87.29 Crore in latest quarter.

Investment Rationale
The brokerage maintains BUY rating on JK Lakshmi Cement (JKLC) with an unchanged target price of INR 780/share (8x Sep’23E consolidated EBITDA). It estimates healthy cash flows would support its major expansion in Udaipur, without stressing its balance sheet and keeping RoE buoyant at ~19- 20%. In Q2FY22, while JKLC’s consolidated revenue rose 7% YoY to INR 12.1bn, EBITDA/APAT fell 14/6% YoY to INR 1.94/0.84bn on sales loss and elevated input costs. JKLC is confident of margin recovery in H2. The upcoming 10MW WHRS plants should aid margin FY23E onwards.

Promoter/FII Holdings
Promoters held 46.01 per cent stake in the company as of 30-Sep-2021, while FIIs owned 12.48 per cent, DIIs 25.29 per cent.