Motilal Oswal's research report on J K Lakshmi Cement
Higher realization (5% higher than our estimate) helped JKLC beat our earnings estimates in 2QFY23. Standalone EBITDA/OPM stood at INR1.4b/10.6% (est. INR1.1b/8.3%). Profit stood at INR590m (est. INR380m). Standalone Cement realizations (excluding non-Cement revenue) were flat QoQ, but the same declined by 2% QoQ based on consolidated financials. The management said that better realizations vis-à-vis its peers in 1HFY23 is due to a better geographical-mix (higher sales in better profitability areas – 55% from 52-53% earlier), greater trades sales, and a better product mix. We raise our FY23/FY24 EBITDA/EPS estimate by 4%/6% each, given its improved performance. Valuations remain inexpensive at 6.5x/5.4x FY24E/FY25 EV/EBITDA. We maintain our Buy rating.
Outlook
The stock trades at 6.5x/5.4x FY24E/FY25E EV/EBITDA (v/s its 10-year average one-year forward EV/EBITDA of 9x). We value JKLC at 7.5x Sep’24 EV/EBITDA (v/s Mar’24 earlier) to arrive at our TP of INR730 (from INR640 earlier). We maintain our Buy rating.
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