Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

JK Lakshmi Cement - Q1 hit by lower sales and fuel inflation; outlook bright - HDFC Securities

Posted On: 2021-08-02 16:17:21 (Time Zone: UTC)

Mr. Rajesh Ravi, Institutional Research Analyst, HDFC Securities

We maintain our BUY rating on JK Lakshmi Cement (JKLC) with a revised target price of INR 850/share (8.5x Jun'23E consolidated EBITDA). We move to consolidated financials in this report, as this truly captures JKLC's operating performance and as it is expanding the capacity of its subsidiary - Udaipur Works (UCWL). In Q1FY22, the company's consolidated sales volume/revenue /EBITDA/APAT declined 7/7/18/31% QoQ, hit by the lockdown and rising fuel prices. Healthy pricing, however, moderated the impact. The ongoing expansion at UCWL will increase JKLC's capacity by 23% to 16.4mn MT by FY24E-end, supporting its volume growth outlook. In our view, its net debt/EBITDA should remain < 1x, owing to its healthy operating performance.

FY22Q1 performance: JKLC's consolidated volume fell 7% QoQ. While cement vol fell 17% QoQ, large clinker sales moderated the total decline. Adjusted for sharp rise in clinker sales and fall in non-cement revenues, cement NSR rose ~6% QoQ (against flattish blended NSR QoQ). The op-lev loss and rising fuel prices moderated blended unitary EBITDA by 11% QoQ to INR 914/MT. Amid healthy cash flows and slower Capex outgo, JKLC continues to reduce debt, reducing interest expense and gearing ratio.

Consolidated numbers present a better picture: We have incorporated JKLC's consolidated financials with this report as this nullifies the negative impact of inter-company sales between JKLC and UCWL on reported operating and financial metrics. In FY21, while standalone unitary EBITDA and RoE stood at INR 799/MT and 20.4%, the consolidated unitary EBITDA and RoE were much higher at INR 799/MT and 23.4% respectively. Further, JKLC is expanding its consolidated capacity by 23% by FY24E, all of it in UCWL. Thus, it's prudent to analyse its consolidated performance.

Healthy balance sheet and return ratios despite ongoing expansion: We expect consolidated volume to grow at 9% CAGR during FY21-24E, riding on demand uptick and capacity additions. We estimate the unitary EBITDA to firm up to ~INR 965/MT in FY24E, bolstering the operating cash flows. This should largely fund JKLC's Capex, keeping gearing in check (net debt/EBITDA under 1x). We also expect the consolidated RoE to remain buoyant at ~20%. Thus, we maintain our BUY rating on the stock, with a revised target price of INR 850/sh (8.5x its Jun'23E consolidated EBITDA).

Shares of JK Lakshmi Cement Limited was last trading in BSE at Rs. 679.95 as compared to the previous close of Rs. 691.6. The total number of shares traded during the day was 44253 in over 2034 trades.

The stock hit an intraday high of Rs. 700.45 and intraday low of 675.7. The net turnover during the day was Rs. 30272220.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Automobile Sector - Monthly Quick View - Aug'21 - Mixed Performance across Segments - Reliance Securities

Axis Securities initiating coverage on ICICI Securities

Company Update - Minda Corporation - Q1FY22 - ICICI Direct

Quant Pick - PVR Ltd - ICICI Direct

Quant Pick - ONGC - ICICI Direct

Peak in the headline wholesale inflation is behind us - WPI August 2021 - Acuité Ratings

Sansera Engineering - IPO - Strong Outlook with Steady Cash Flow - Reliance Securities

APL Apollo Tubes - Journey from a semi-commodity player to a branded one - HDFC Securities

Nazara Technologies Ltd - Upbeat in medium-term, Uncertain over Long-term - YES Securities

IPO Review - Sansera Engineering Ltd - ICICI Direct

Overall index is still 0.3% lower than the pre-pandemic levels - IIP July 2021

YES SECURITIES on Monthly General Insurance & Mutual Funds Data

India urban logistics spaces expected to cross 7 million sq. ft by 2022: JLL

Neogen Chemicals - Breaking into the next orbit with a bang - HDFC Securities

Gladiator Stocks - Bharti Airtel Ltd - ICICI Direct

Gladiator Stocks - V-Guard - ICICI Direct

Balkrishna Industries - Industry export growth accelerates - ICICI Securities

HDFC Life Insurance - Exide Life Acquisition - Maintain ADD - YES Securities

Gladiator Stocks - Grindwell Norton - ICICI Direct

Gladiator Stocks - Godrej Properties - ICICI Direct

Monthly Auto Volumes - August 2021 - ICICI Direct

Stock Tales - Easy Trip Planners - ICICI Direct

IPO Review - Vijaya Diagnostic Centre Ltd - ICICI Direct

AU Small Finance Bank - Attrition at top level remains key challenge; business momentum sustained in Jul/Aug'21 - ICICI Securities

Gladiator Stocks - State Bank of India - ICICI Direct

Gladiator Stocks - PNC Infratech - ICICI Direct

Vijaya Diagnostic Centre Ltd - IPO Note - YES Securities

Consumer Durables Sector - Lockdown mars performance yet again - Institutional Research Desk at HDFC Securities

75% of the employees today want to be in office at least once a week as compared to 52% in October 2020: JLL

Gladiator Stocks - Safari Industries - ICICI Direct

Gladiator Stocks - Interglobe Aviation - ICICI Direct

IPO Review - Ami Organics Ltd - ICICI Direct

Q1FY22 GDP - 31st Aug 2021 - Acuité Ratings & Research

Avanti Feeds - Higher input prices hurt margins - ICICI Securities

Company Update - Restructuring - Aarti Industries - ICICI Direct

Q1FY22 Company Update - MM Forgings - ICICI Direct

Company Update - Arvind Fashions - ICICI Direct

Zomato - Can margins and multiples surprise? - ICICI Securities

Ujjivan Small Finance Bank - Top management change and lumpy provisioning concern to weigh on valuation in near term - ICICI Securities

Bharat Dynamics - Guided missile systems to drive orderbook and profit growth - ICICI Securities

Economy - Continued accommodation necessary despite inflationary risks: MPC minutes - ICICI Securities

InterGlobe Aviation - Annual report analysis: Liquidity management remains the mainstay in anticipation of traffic recovery - ICICI Securities

General insurance - Health remains dominant growth driver; Strong all-round performance by Bajaj Allianz - ICICI Securities

Earnings Wrap Q1FY22: Resilient earnings, limited impact of second Covid wave - ICICI Direct

Fine Organic Industries Results Review - In-line performance - HDFC Securities

Power Plus Sector Update - July witnessed strong ~10% generation growth - HDFC Securities

Information Technology Sector Update - 'Hit Refresh' - HDFC Securities

Maintain ADD on JK Cement - Healthy performance - HDFC Securities

Maintain BUY on Star Cement - Margin recovers on pricing gain - HDFC Securities

Maintain BUY on Sadbhav Engineering - Long road to recovery - HDFC Securities

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020