JK Cement - Result Update - ICICI Securities

JK Cement reported better-than-expected Q4FY20 numbers, beating our estimates on the operational front. Revenues broadly stayed flat YoY at Rs. 1,477 crore (I-direct estimate: Rs. 1,433 crore). Suspension of operations in end-March led to a 7.3% drop in volume YoY to 2.67 MT (in line with I-direct estimate). Blended realisations grew 6.8% YoY to Rs. 5,533/t (I-direct estimate: Rs. 5,393/t). Higher realisations drove EBITDA margin expansion of 470 bps YoY to 23.4% (I-direct estimate: 21.3%). EBITDA/t jumped 33.6% YoY to Rs. 1,297/t (I-direct estimate: Rs. 1,148/t); EBITDA increased 24% YoY to Rs. 346 crore (I-direct estimate: Rs. 305 crore). In Q4FY20, JK Cement made impairment provision of Rs. 178 crore for its UAE subsidiary that dragged its PBT and PAT. PBT dropped 62% YoY to Rs. 80 crore and PAT plunged almost 100% to Rs. 0.2 crore vs. Rs. 150 crore last year (I-direct estimate: Rs. 120.7 crore).

Valuation & Outlook

With commissioning of Balasinor grinding unit, 90% of JK's capacity would be based on new technologies and be efficient. Management's efforts to improve cost efficiencies (freight, power costs) are expected to improve profitability, going ahead. Thus, we remain positive on the company considering its margin profile and healthy balance sheet. However, current levels, valuations (11x FY22E EV/EBITDA), imply limited upside, lead us to downgrade the company to HOLD, with a revised target price of Rs. 1,550.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_JKCement_Q4FY20.pdf

Shares of J.K.CEMENT LTD. was last trading in BSE at Rs.1396 as compared to the previous close of Rs. 1246.25. The total number of shares traded during the day was 16538 in over 2534 trades.

The stock hit an intraday high of Rs. 1445.3 and intraday low of 1264. The net turnover during the day was Rs. 22095353.

Source : Equity Bulls

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