ICICI Direct's research report on JK Lakshmi Cement
During Q3FY21, JK Lakshmi managed to sustain its margins on a YoY basis despite an increase in costs leading to a better-than-expected performance for Q3FY21. Revenue in Q3 grew 18.7% YoY to Rs 1192.8 crore (vs I-direct estimate: Rs 1121.3 crore). Plant utilisation was at 92% led by improved sales volumes that were up 15.7% YoY to 2.7 MT (vs. I-direct estimate: 2.6 MT). Realisations were also up 2.6% YoY to Rs 4,426/tonne (vs. I-direct estimate: Rs 4,356/t). This led to a margin expansion of 97 bps YoY to 16.1% (in line with our estimate) despite cost increase of 1.4% YoY on per tonne basis. Further, higher other income, lower interest cost led to PAT growth of 108% YoY. Progress on the waste heat recovery unit III Project at Sirohi is as per schedule and will be commissioned by July 2021. The company's subsidiary Udaipur Cement Works is expanding its cement capacity by 2.5 MT, which is likely to be commissioned in December 2023E. Post this expansion, consolidated capacity of JKLC and UCWL will get enhanced to 16.4 MT.
Outlook
we remain positive on the company. We maintain BUY rating with a revised TP of Rs 470/share (@ 6x FY23E EV/EBITDA) (earlier TP Rs 450)
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