JK Lakshmi Cement - Q1FY21 Result Update - ICICI Securities

JK Lakshmi's Q1FY21 performance remained above estimates mainly on account of better-than-expected sales volume for the quarter. Plant utilisation was at 65% for the quarter led by improved sales volumes during May-June. Total sales volume fell 18% YoY to 1.9 MT, ahead of our expected sales volume of 1.6 MT. On the other hand, realisation fell 3.4% YoY to Rs. 4319/tonne (below I-direct estimate: Rs. 4561/t). This led to revenue de-growth of 20.8% YoY to Rs. 825.2 crore (vs. I-direct estimate: Rs. 733.4 crore). While realisations was weak, total production cost/tonne fell 4.6% YoY leading to 106 bps YoY expansion in margins. EBITDA margins were at 17.4% (vs. I-direct estimate: 14.5%) and EBITDA per tonne of Rs. 752/tonne (vs. I-direct estimate: Rs. 661/t). The major contributors to cost reductions were P&F and freight costs that were down 28.2% YoY (led by lower petcoke prices) and 5.1% YoY, respectively. Going forward, while cement prices are expected to decline with the progress of monsoon, sales volumes would continue to improve further led by healthy demand from rural and semi-urban regions.

Valuation & Outlook

The B/S continues to remain healthy with D/E of 0.6 and RoIC expected to reach 20% by FY22E. Furthermore, current levels imply that JK Lakshmi Cement is trading at an EV/t of 43 and 5.2x FY22E EV/EBITDA, thus providing valuation comfort. Thus, we maintain BUY rating with a revised target price of Rs. 330/share (valuing @ 6x FY22E EV/EBITDA and $49 EV/tonne).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_JKLakshmi_Q1FY21.pdf

Shares of JK LAKSHMI CEMENT LTD. was last trading in BSE at Rs.282.5 as compared to the previous close of Rs. 284.8. The total number of shares traded during the day was 11385 in over 552 trades.

The stock hit an intraday high of Rs. 288.45 and intraday low of 282.5. The net turnover during the day was Rs. 3251400.

Source : Equity Bulls

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