Dolat Capital is bullish on JK Lakshmi Cement has recommended buy rating on the stock with a target price of Rs 283 in its research report dated 21, 2020.
Dolat Capital's research report on JK Lakshmi Cement
JKLC posted (9.5%)/ 53.9%/ 128.5% YoY growth in revenue/ EBITDA/ APAT to Rs10.6 bn/ Rs2.0 bn/ Rs988 mn in Q4FY20 driven by 7.7% YoY realization growth (-0.5% QoQ). We expect 1.5%/ 0.6%/ (4.3%) revenue/ EBITDA/ APAT CAGR over FY20-22E led by (15.0%)/ 20.0% volume growth and (1.0%)/ 2.0% cement realization growth in FY21E/ FY22E. We reduce our FY21E estimates by 21.1%/ 26%/ 49.4% for revenue/ EBITDA/ APAT primarily due to (-15%) vs. 0.9% volume growth and (-1%) vs. 0.7% realization growth to factor extended COVID-19 lockdown. However, we broadly maintain our FY22E estimates for revenue/ EBITDA/ APAT. We factor JKLC to start doing capex by end of FY21E for brown-field expansions to capture growth in demand.
Outlook
The current valuation of 7.2x/ 5.5x FY21E/22E EV/EBITDA (~50% discount to 3/ 5 /10 year averages) are attractive. Thus, we maintain Buy with a revised SOTP of Rs283 based on (6x standalone FY22E EV/EBITDA, 50% of FY22E Capital WIP and JKLC’s 72.5% stake in Udaipur Cement Works at 30% holding discount).
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Read More
