ICICI Securities has given Buy recommendation for JK Cement recommended buy rating on the stock with a target price of Rs 3935 in its resear with a target price of Rs. 3935 in its research report issued on Mar 07, 2022
ICICI Securities research report on JK Cement
JK Cement (JKCE) announced its plan to diversify into paint business and invest up to Rs6bn in it over the next five years. It plans to leverage its strong (a) JK White cement / putty brand, (b) 50,000+ distribution network of white cement / putty dealers (large portion of which also sells paints), and (c) longstanding relationship with real estate developers. While the company’s diversification into paint business may raise capital allocation concerns (given many entry barriers, heightened competition and probability of minor EBITDA loss in the initial years), it may provide steady-state growth / stable income over the medium term, in our view. Besides, paint is still likely to remain a relatively small business for JKCE and constitute <5% of capital employed, revenue and EBITDA over the next five years.
Maintain BUY on the stock with an unchanged target price of Rs3,935/sh (14x FY24E EV/E).