Buy JK Lakshmi Cement; target of Rs 430: Angel Broking

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Angel Broking's report on JK Lakshmi CementFor 1QFY2016, JK Lakshmi Cement (JKLC)’s reported numbers have come in line with our estimates on the profitability front. The company’s net sales declined by 1.6% yoy to `590.8cr, although the same are above our estimate of `553.9cr.Net Sales came in above our estimate mainly due to a higher than expected 14.6% yoy increase in volume numbers. The EBITDA declined by 55.3% yoy to `50.7cr, in line with our estimate of `52.6cr. However, the EBITDA margin, at 8.6%, was below our estimate of 9.5%, mainly due to a higher than expected fall in realization. The EBITDA/tonne during the quarter fell sharply by 61% yoy to `307. JLKC reported a net loss of `23.4cr (our estimate was of a loss of `23.9cr), mainly due to increase in depreciation and interest cost on account of commissioning of its new Durg plant in March 2015.Outlook and valuation: Going ahead, JKLC’s new capacity addition and improvement in demand situation would lead its top-line to grow at a CAGR of 25.3% during FY2015-17. The bottom-line is also expected to grow at a CAGR of 81.5% over FY2015-17E, driven by improvement in cement demand and healthy pricing scenario. We maintain our Buy rating on the stock with a target price of `430 on 8.5x EV/EBITDA and EV/tonne of US$90 (on FY2017E capacity) basis, says Angel Broking research report.For all recommendations,  click here  Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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