JK Lakshmi Cement - Mahurat Picks 2012 - ICICIdirect

(Buying Range: Rs.127-Rs.120)

JK Lakshmi Cement is a North India based cement company having an integrated cement plant with the capacity of 4.2 MTPA at Sirohi, Rajasthan and 0.55 MTPA each at Kalol (Gujarat) and Jhajjar (Haryana). JKLC is expanding its cement capacity by 2.7MTPA at Durg, Chhattisgarh over next one or two years

On account of strong demand growth expectations in northern, central and western regions, we expect cement volumes to grow at ~7% CAGR during FY12-14E to 5.6 MT in FY14E from 4.9 MT in FY12. Also, improvement in utilisation rates, going forward, would help in sustainable pricing. We expect realisation to grow ~16% YoY in FY13E and ~6% in FY14E. Margins are expected to improve in FY13E/14E, led by improvement in realisations and operating leverage benefits

We remain positive on the stock on account of capacity expansion led volume growth, improvement in margins and return ratios and cheap valuations. It is trading at $54/tonne at FY14E capacity of 8.1 MT, which is ~55% discount to the current replacement cost.

Source : Equity Bulls

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