Cholamandalam Securities is bullish on JK Cements has recommended buy rating on the stock with a target price of Rs 884 in its research report dated November 13, 2018.
Cholamandalam Securities' research report on JK Cements
JKCE’s revenue (excluding other operating income) remained flat at INR 10.9bn (-0.4% YoY), during 2QFY19 with blended volumes falling 2.9% YoY to 2.16mn tonnes. However, blended realizations improved by 2.5% YoY, this quarter. Grey cement realization for the quarter stood at ~INR 4,022, up 1.6% YoY, and white cement (including wall putty) realization was up 4.0% YoY at ~INR 11,719. Grey cement volume declined 3% YoY to 1.87mn tonnes and white cement (including wall putty) volume was down 2% YoY to 0.29mn tonnes. Despite reporting weak sales volume, the Management is optimistic of meeting 7% volume guidance which it had previously given for FY19E. This will be aided by the launch of a premium product ‘JK Super Strong Cement’ in the northern regions (currently present in southern zone).
Outlook
We maintain BUY rating on the stock, with a revised target price of INR 884 assigning a multiple of 10X on EV/EBITDA of FY20E.
For all recommendations report, click here
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