Buy JK Lakshmi Cement, target price Rs 872: HDFC Securities

HDFC Securities has a buy call on JK Lakshmi Cement with a target price of Rs 872. The current market price of JK Lakshmi Cement is Rs 723.1. JK Lakshmi Cement, incorporated in 1938, is a Mid Cap company with a market cap of Rs 8521.08 crore, operating in the Cement sector.

JK Lakshmi Cement's key products/revenue segments include Cement & Clinker, Building Products and Other Operating Revenue for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 1505.87 crore, up 21.18% from last quarter Total Income of Rs 1242.67 crore and down -12.43% from last year same quarter Total Income of Rs 1719.54 crore. The company has reported net profit after tax of Rs 62.75 crore in the latest quarter.

The company's top management includes Mr.Bharat Hari Singhania, Mr.Ravi Jhunjhunwala, Mr.Sadhu Ram Bansal, Mrs.Bhaswati Mukherjee, Mr.N G Khaitan, Dr.Raghupati Singhania, Mr.Arun Kumar Shukla, Mrs.Vinita Singhania, Mr.Bharat Hari Singhania, Mrs.Shwetambara Shardul Shroff Chopra, Mr.Ravi Jhunjhunwala, Mr.Sadhu Ram Bansal, Mrs.Bhaswati Mukherjee, Mr.N G Khaitan, Dr.Raghupati Singhania, Mr.Arun Kumar Shukla, Mrs.Vinita Singhania, Mrs.Shwetambara Shardul Shroff Chopra. Company has S S Kothari Mehta & Co as its auditors. As on 31-12-2024, the company has a total of 12 Crore shares outstanding.

Investment Rationale
HDFC Securities remains positive on JK Lakshmi Cement's growth prospects (both on volume and margin). Thus, they estimate the company to deliver a 6% consolidated volume CAGR during FY24-27E (despite flattish FY25E). This implies a 9% volume CAGR during FY25-27E. Subsequently, the brokerage estimates unit EBITDA to rebound from a six-year low of Rs 648 per MT in FY25E to rs 863/968 per MT in FY26/27E. Furthermore, they estimate its consolidated net debt to EBITDA to cool off to remain under 2x during FY26/27E. HDFC Securities currently values JK Lakshmi Cement at 9x its FY27E consolidated EBITDA. They maintain a BUY rating with an unchanged target price of Rs 872/share.

Promoter/FII Holdings
Promoters held 46.34 per cent stake in the company as of 31-Dec-2024, while FIIs owned 11.93 per cent, DIIs 25.2 per cent.