ICICI Securities is bullish on JK Cement recommended buy rating on the stock with a target price of Rs 1725 in its research report dated September 01, 2020.
ICICI Securities research report on JK Cement
JK Cement’s (JKCE) Q1FY21 standalone EBITDA declined 29% YoY to Rs2.15bn, marginally better than our/consensus estimates of Rs1.96bn owing to lower costs. Total cost/te declined 4% YoY (I-Sec: 1% YoY) owing to reduction / deferment of discretionary costs. Hence, blended EBITDA/te was down only 7% YoY to Rs1,219/te (I-Sec: Rs1,125/te). We believe ramping-up of new capacity at Mangrol would not only provide additional volumes but also improve cost structure / profitability. Consolidated net debt is likely to peak out at Rs24bn in FY21E as JKCE could generate OCF of >Rs10bn p.a. from FY22E which would be sufficient for its future capex requirements.
Outlook
We maintain our FY21E-FY22E EBITDA with target price unchanged at Rs1,725/share (10x FY22E EV/E). Maintain BUY.
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