JK Cement - Strong volume ramp-up - ICICI Securities

JK Cement's (JKCE) Q4FY21 standalone adjusted EBITDA at Rs4.8bn (up 38% YoY), was broadly in line with consensus estimates. Grey cement volumes including clinker sales showed strong growth at 48% YoY and 23% QoQ implying 2-year CAGR of 18%. However, grey cement realisation declined 1.6% QoQ and, with increasing share of grey cement volumes, blended EBITDA/te fell 5% YoY and 13% QoQ to Rs1,228/te. Ground-breaking ceremony for 4mnte greenfield expansion (capex: Rs30bn) at Panna was held on 5th May'21, and the project is expected to be operational by H1FY24. Accordingly, JKCE is likely to post industry-leading volume growth over next few years backed by strong expansion plans. Consolidated net debt declined by Rs6.5bn to
- Standalone revenues increased 39% YoY to Rs20.3bn, in line with estimates. Grey cement volumes including clinker sale of 0.22mnte increased 48% YoY and 23% QoQ to 3.5mnte (2-year CAGR of 18%) implying ~95% utilisation of the expanded capacity including South. Realisation fell 1.6% QoQ at Rs4,416/te owing to higher clinker sales QoQ and volume push. White cement and wall care putty volumes grew 29% YoY (2-year CAGR of 6%) to 0.39mnte, while realisation was up 1.5% YoY / 2.6% QoQ at Rs12,262/te. Other operating income rose 28% YoY to Rs240mn led by higher volumes. Despite covid-related disruptions, JKCE increased its grey cement volumes by 21% YoY in FY21 aided by capacity expansion.

- Standalone adjusted EBITDA up 38% YoY to Rs4.8bn (I-Sec: Rs5.07bn). Blended cost/te declined 4.7% YoY / 2.3% QoQ owing to better operating leverage. Other expenses/te declined 12% YoY owing to better operating leverage; however, it increased 8% QoQ on higher packing costs and marketing expenses. Other expenses included Rs390mn towards impairment of old power assets, which we have adjusted for arriving at recurring EBITDA. Assuming 28-29% EBITDA margins for white cement / putty, implied grey cement EBITDA/te works out to Rs966-980/te. During the quarter, JKCE recognised provision towards diminution of carrying amount of investment in J.K. Cement (Fujairah) FZC, amounting to Rs1.7bn. Adjusted PAT grew 51% YoY to Rs2.7bn (I-Sec: Rs2.8bn).

- Consolidated net debt fell from Rs23.2bn in FY20 to
Shares of J.K.CEMENT LTD. was last trading in BSE at Rs.2820 as compared to the previous close of Rs. 2850.75. The total number of shares traded during the day was 5718 in over 1259 trades.

The stock hit an intraday high of Rs. 2826.3 and intraday low of 2706.65. The net turnover during the day was Rs. 16006974.

Source : Equity Bulls

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