Dolat Capital Market has given Buy recommendation for JK Lakshmi Cement with a target price of Rs. 446 in its research report issued on Feb 02, 2021

Dolat Capital Market’s research report on JK Lakshmi Cement

JKLC reported results above estimates on all fronts. Volumes too were above estimates however, realization and EBITDA/tn in line. JKLC posted 18.7%/ 26.3%/ 108.1% YoY growth in revenue/ EBITDA/ APAT to Rs11.9 bn/ Rs1.9 bn/ Rs1.0 bn in Q3FY21 led by 16.0% YoY growth in volumes coupled with rise in realization by 2.3% YoY (+0.8% QoQ). We expect 5.2%/ 3.6%/ 4.3% revenue/ EBITDA/ APAT CAGR over FY20-23E led by 6.4%/ 2.4%/ 4.1% volume growth and -0.3%/ 2.0%/ 1.0% cement realization growth in FY21E/ FY22E/ FY23E. We increase our revenue/ EBITDA/ APAT estimate by 4.6%/ 5.8%/ 19.8% for FY21E considering 9MFY21 results. However, we broadly maintain our FY22E/ FY23E estimates. JKLC has announced 2.5 mtpa including 1.5 mtpa clinker (to be commissioned in Q3FY24E) greenfield expansion with a capex of Rs14 bn to be done at its subsidiary UCWL to capture growth in demand.


We have assumed the same capex of UCWL (to be completed in FY24E) in standalone numbers. Considering, continuation of strong performance in Q3FY21 and robust outlook given by management, we maintain Buy with a revised SOTP of Rs446 based on (7.0x standalone FY23E EV/EBITDA, 50% of FY23E Capital WIP and JKLC’s 72.5% stake in Udaipur Cement Works at 30% holding discount).