Buy JK Cement; target of Rs 4620: ICICI Securities

ICICI Securities's research report on JK Cement

JK Cement’s (JKCE) Q4FY24 EBITDA (of INR 5.48bn, up 51% YoY but down 10% QoQ) stood broadly in line with estimates as sustained drop in variable cost helped offset the operating leverage disappointment (of fixed cost being flat QoQ). While the overhang of underlying weakness in cement prices is driving a 14%/8% cut in our FY25/26E EBITDA, JKCE remains a favourably placed mid-cap cement stock given – a) steady capex offering sustained volume growth visibility; b) scope of ~INR 150-200/t cost efficiency enhancement (as per the management); c) strong balance sheet with net debt/EBITDA of ~1.6x FY24 (and despite capex, estimated to remain <2x over FY25-FY26) and d) best-in-class RoEs of 15-16%

Outlook

We continue to value JKCE at 16x FY26E EV/EBITDA and maintain BUY with a revised TP of INR 4,620 (INR 5,131 earlier).