Motilal Oswal has given Buy recommendation for J K Lakshmi Cement recommended buy rating on the stock with a target price of Rs 590 in its researc with a target price of Rs. 590 in its research report issued on May 19, 2022
Motilal Oswal’s research report on J K Lakshmi Cement
Higher volumes (13% above our estimate) and lower costs (-9% QoQ and 10% lower than our estimate) helped JKLC post an EBITDA of INR2.8b (est. INR1.8b) and EBITDA/t of INR879 (est. INR636). Adjusted profit (adjusted for deferred taxes) stood at INR1.13b (est. INR897m). A sharp reduction in other expense was due to lower fixed and ad spends. We raise our FY23/FY24 EBITDA estimate by 9%/7%, which leads to an EPS increase of 7%/4%. JKLC’s expansion plan in North India, via its subsidiary Udaipur Cement Works (UCWL), is likely to be commissioned by Mar’24, which offers growth visibility in the medium-term. Given the inexpensive valuation (4x FY24E EV/EBITDA), we maintain our Buy rating.
Outlook
The stock trades at 5.2x/4x FY23E/FY24E EV/EBITDA. We value JKLC at 7x FY24E EV/EBITDA to arrive at our TP of INR590. We maintain our Buy rating