Cholamandalam Securities is bullish on JK Lakshmi Cements has recommended buy rating on the stock with a target price of Rs 347 in its research report dated November 20, 2018.
Cholamandalam Securities' research report on JK Lakshmi Cements
During 2QFY19, JKLC posted a volume growth of 13% YoY to 2.13mn tonnes including clinker sales of 0.26mn tonnes. However, revenue rose by only 10% YoY to INR 8.14bn due to marginal decline in realization to INR 4,003 (-3% YoY), while it was flat sequentially. Trade and non-trade mix during the quarter stood at 55:45. The company has incrementally started to focus more on trade segment (giving higher utilization) barring Gujarat (larger market for Non-Trade segment). RMC revenue this quarter was INR 390mn. Company’s product mix in the east was 88% PPC, while it was 80% PPC in the north (excl. Guj) and was only 55% PPC in Gujarat.
Outlook
Going ahead, JKLC's earnings growth is expected to be driven by (i) Commissioning of new capacities and improved demand in northern region (ii) better realization & improvement in margins on the back of cost saving initiatives (Thermal power plant and grinding unit). We maintain a BUY rating on the stock, with a target price of INR 347, valuing the company, at an EV/tn of USD 80/tn.
For all recommendations report, click here
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