Moneycontrol
Feb 15, 2017 01:32 PM IST | Source: Moneycontrol.com

Sell JK Lakshmi Cement; target of Rs 340: Centrum

Centrum is bearish on JK Lakshmi Cement has recommended sell rating on the stock with a target price of Rs 340 in its research report dated February 07, 2017.

Sell JK Lakshmi Cement; target of Rs 340: Centrum


Centrum's research report on JK Lakshmi Cement


JK Lakshmi Cement (JKLC) delivered 22% standalone EBITDA growth in Q3FY17, led by production ramp-up in east and cost reductions amid poor demand post demonetisation. As JKLC is operating at peak clinker utilisation in north, we estimate its 5% volume CAGR during FY16-19 will be driven by higher sales in the eastern region.


Outlook


In the east JKLC is facing cost headwinds as well as weaker realisation (owing to ongoing expansions), moderating recovery in profitability. Amid ongoing capex to reduce power cost at its eastern operations, JKLC will also have to fund clinker expansion in the north to drive volume growth FY19/20 onwards. This will increase capex rate FY19E onwards and mute deleveraging. We maintain SELL with a lower TP of Rs 340.

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