Buy JK Cement; target of Rs 580: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal is bullish on JK Cement and has recommended buy rating on the stock with a target of Rs 580 in its February 6, 2013 research report.
 
“JK Cement, Net sales improved by 11.7% YoY (-3.6% QoQ) to INR6.7b, while EBITDA stood at INR1.3b (+11.8% YoY, 3.2% QoQ) and margin at 19.5% (+1.3pp QoQ, 0.1pp YoY). PAT was at INR544m (+25% YoY, 0.5% QoQ), moderated by higher interest expense, which includes a forex loss of ~INR37m and interest on sales tax liability of ~INR20m. Grey cement volumes grew marginally by 1.9% YoY (-8% QoQ) to 1.3MT, while White cement (including Putty) continues a healthy growth to 0.19mt (+40% YoY, 20% QoQ). Grey cement realizations stood at INR3,782/ton (down INR189/ ton QoQ), while blended White realizations (including Putty) were up by INR476/ton QoQ to INR11,099/ton. Blended realizations were up 7.1% YoY/2.9% QoQ, led by (1) uptick in White cement realizations and (2) higher revenue mix from White cement (31% v/s 24% in 2QFY13).”
 
“Grey cement EBITDA/ton deteriorated by INR49 YoY (-INR11 QoQ) to INR632. This is largely attributable to (1) QoQ decline in realizations, (2) higher freight cost and (3) negative operating leverage. EBITDA/ton at North India plants stood at INR537, while South plants enjoyed profitability of INR861/ton. White cement (incl Putty) EBITDA/ton improved INR182 QoQ to INR2,909. We are upgrading EPS estimates for FY13E/14E/15E by 10/2/3% to INR33.8/ 43.8/62.1 to factor: (1) lower volume growth in Grey cement business of 10% in FY13E (v/s 13% earlier) and 8%/10% for FY14E/15E and (2) higher realizations in White cement business, with YoY increase of ~INR1,900/ton in FY13E (v/s INR1,300/ton earlier). This translates into an SOTP upgrade of ~4% to INR580. JKCE trades at 4.2x FY15E EBITDA and USD75/ton. Our SOTP-based target price is INR580, which offers 83% upside. Maintain Buy,” says Motilal Oswal research report.

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