JK Cement - Q1FY21 Result Update - ICICI Securities

JK Cement reported a mixed Q1FY21 results with revenue and EBITDA drop of 27.3% YoY and 29.1% YoY, respectively. The major laggard has been the white cement volume that fell 48% YoY to 0.17 MT being an urban centric product that was quite impacted due to lockdown. Grey cement volumes also fell 19.3% YoY. However, it was better than the industry's overall performance. Total cost of production fell 4.4% YoY to Rs. 4244/tonne mainly led by a sharp fall in P&F cost that led to better-than-expected margins for the quarter. EBITDA/t came in at Rs. 1219/t (vs. I-direct estimate: Rs. 1047/t). PAT came in at Rs. 77.7 crore, down 49.5% YoY mainly led by lower sales revenue during the quarter. While in the near term weakness in cement prices (seasonal), higher petcoke price would pressurise margins, the company is better off with healthy sales volumes (July-August posting over 20% YoY jump) led by newly commissioned capacity of 3.5 MT, improved cash flows from a medium to long term perspective.

Valuation & Outlook

The management's efforts to improve cost efficiencies through newly added capacities (4.2 MT) are expected to improve profitability, going ahead. Thus, we remain positive on the company considering its margin profile and healthy balance sheet. The full benefit of expansion would be visible in FY22E. Factoring in the same, we upgrade the stock to BUY with a revised target price of Rs. 1800/share (i.e. valuing at 10.5x FY22E EV/EBITDA).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_JKCement_Q1FY21.pdf

Shares of J.K.CEMENT LTD. was last trading in BSE at Rs.1490 as compared to the previous close of Rs. 1494.65. The total number of shares traded during the day was 3980 in over 877 trades.

The stock hit an intraday high of Rs. 1516.15 and intraday low of 1453.05. The net turnover during the day was Rs. 5973566.

Source : Equity Bulls

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