International brokerage Jefferies slashed its target price on JK Lakshmi Cement, while maintaining its hold rating following the cement player's earnings report for the quarter ended March.
JK Lakshmi Cement posted a 41.2 percent on-year rise in net profit at Rs 162.1 crore for the three months ended March.
The revenue from operations slipped 4.4 percent to Rs 1,780.9 crore compared to Rs 1,862.1 crore in the same quarter of the last fiscal year. The EBITDA jumped 44.7 percent to Rs 336.6 crore against Rs 232.6 crore in the year-ago period.
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Jefferies said JK Lakshmi Cement's EBITDA beat resulted from lower costs. The brokerage cut its target price to Rs 905 per share, indicating an upside of 13 percent from the previous close.
The consolidated cement volume growth of one percent for the quarter was a result of lower volumes from outsourced units.
The management also indicated that the company’s expansion plans are on track. JK Lakshmi Cement will commission a grinding capacity of 1.35 mtpa at Surat in FY25 and Durg (Phase – I) expansion by FY26-end.
Further, in the northeast region, JK Lakshmi Cement is in the process of land acquisition and getting external approvals such as environment clearance. Following the process, setting up the cement plant will take two years.
Jefferies added the higher capex, of around Rs 1,200-1,600 crore per year for FY25-27, will be towards expansion in the already overcrowded East region of the country.
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