Q3FY21 Result Update - JK Cement - ICICI Direct

JK Cement's performance was ahead of our estimates for Q3FY21 with revenue growth of 25.3% YoY to Rs. 1760.1 crore (vs. I-direct estimate: Rs. 1672.5 crore). Blended sales volume grew 23.8% YoY to 3.17 MT while realisations improved 1.3% YoY to Rs. 5,554/t and stayed flat QoQ vs. expected decline of ~2%. EBITDA margins improved 572 bps YoY to 25.5%, better than our estimated margins of 24.8%, supported by lower raw material & employee expenses. EBITDA/t came in at Rs. 1,416/t vs. Rs. 1085/t last year and Rs. 1461/t last quarter. It was better than our expected EBITDA/t of Rs. 1,340/t. Reported PAT for Q3FY21 came in at Rs. 238.3 crore, up 73.2% YoY, ahead of our estimated PAT of Rs. 200.6 crore. On the B/S front, gross debt has increased marginally from Rs. 2,733 crore as on September 2020 to Rs. 2,791 crore of December 2020, owing to capital expenditure made during the year of ~Rs. 1,648 crore. With improved earnings, net debt to EBITDA has declined to 0.98x vs. 1.35x reported in FY20 while net debt to equity was at 0.4x vs. 0.51 as of Mar-20. In the next phase of expansion, the company would set up 4 MT integrated grey cement capacity at Panna MP with split grinding unit in UP and 12 MW WHRS plant for capex of Rs. 2970 crore (i.e. at $103/t).

Valuation & Outlook

The management's efforts to improve cost efficiencies through newly added capacities (4.2 MT) are expected to drive profitability. Thus, we believe there is further scope for growth and margin expansion. The funding for phase-II expansion will be partially be done by incremental inflows from newly added capacities. Hence, it would keep debt levels under check. Hence, we maintain BUY rating with a revised target price of Rs. 2950/share (i.e. valuing at 13.5x FY23E EV/EBITDA) (earlier TP Rs. 2450).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_JKCement_Q3FY21.pdf

Shares of J.K.CEMENT LTD. was last trading in BSE at Rs.2711.75 as compared to the previous close of Rs. 2422.05. The total number of shares traded during the day was 49732 in over 5273 trades.

The stock hit an intraday high of Rs. 2898.85 and intraday low of 2408.25. The net turnover during the day was Rs. 130257733.

Source : Equity Bulls

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