JK Lakshmi Cement - Q2FY21 Result Update - ICICI Direct

JK Lakshmi's Q2FY21 performance was above estimates mainly on account of better-than-expected sales volume. The company also managed to improve its margins despite a fall in realisations leading to better-than-expected overall performance for the quarter. Plant utilisation was at 82% for the quarter led by improved sales volumes. Total sales volume grew 16% YoY to 2.4 MT, ahead of our expected sales volume of 2.1 MT. On the other hand, realisation dipped 3.7% YoY to Rs. 4,371/tonne (vs. I-direct estimate: Rs. 4,250/t). This led to revenue growth of 11.7% YoY to Rs. 1044.8 crore (vs. I-direct estimate: 907.5 crore). Though realisation declined, total production cost per tonne also fell 6.0% YoY leading to a 198 bps YoY expansion in margins. EBITDA margins came in at 17.9% (vs. I-direct estimate: 16.2%) with EBITDA per tonne at Rs. 781/tonne (vs. I-direct estimate: Rs. 690/t). The major contributors to cost reductions were P&F and freight costs that were down 15.1% YoY (led by lower pet coke prices) and 5.1% YoY, respectively. As a result, net profit posted growth of 75.5% YoY.

Valuation & Outlook

While b/s stays healthy with D/E of 0.6x, the growth concern beyond FY23E is now being addressed with new capacity expansion. The company is trading at an EV/t of $51 and 4.9x FY22E EV/EBITDA, thus providing valuation comfort. We maintain BUY recommendation with a target price of Rs. 335/share (@ 5.5x FY22E EV/EBITDA).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_JKLakshmiCement_Q2FY21.pdf

Shares of JK LAKSHMI CEMENT LTD. was last trading in BSE at Rs.337 as compared to the previous close of Rs. 328.6. The total number of shares traded during the day was 19341 in over 922 trades.

The stock hit an intraday high of Rs. 342.45 and intraday low of 333. The net turnover during the day was Rs. 6562413.

Source : Equity Bulls

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