Buy JK Cement; target of Rs 480: Nirmal Bang

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Nirmal Bang is bullish on JK Cement and has recommended buy rating on the stock with a target of Rs 480 in its February 5, 2013 research report.
 
“JK Cements’ (JKCL) 3QFY13 performance was better than our estimates, with EBITDA at Rs1.34bn (+12% YoY) versus our estimate of Rs1.19bn and net profit of Rs 544mn (+25% YoY) versus our estimate of Rs 466mn, primarily driven by higher sales of value added product (white cement and wall putty) coupled with lower cost inflation. Net sales increased 11.7% YoY to Rs6.9bn in line with our estimates primarily driven by value added product realisation growth of 15%. Given the sustainable volume growth (led by improvement in capacity utilisation and implementation of expansion plan), and earnings CAGR of 27% likely over FY12- FY15E (broadly in line with consensus), JKCL’s valuation is set for a rerating. We have retained our Buy rating on the stock with a target price of Rs480.”
 
“The company posted increase in EBITDA by 12% to Rs1.34bn primarily driven by 42% YoY growth in EBITDA of value added product. Major costs were in line with our estimates, except freight costs which increased by 13.7% to Rs1027/tn primarily due to increase in rail freight and higher diesel prices. Overall expenses were up by Rs269/tn while there was increase in blended realisation by Rs 338/tn. This has led to blended EBITDA/tn increase of Rs 69/tn to Rs 979/tn. Despite fall in grey cement realisation by 3%, net sales have increased by 11.7% to Rs6.9bn, driven by 35% YoY growth in white cement sales volume and 15% YoY increase in realisation. White cements sales volume increased by 35% to 0.12mt and grey cement sales volume increased by 2% YoY. Blended realisation has increased by 7.2% YoY to Rs 4,995/tn.”
 
“We maintain our Buy rating to JKCL with a target price of Rs480 based on EV/EBITDA multiple of 5.5x FY14E earnings (~50% discount compared to large players) and implied EV/tn of US$90 (a discount of 40% on replacement costs). We believe the improvement in return ratios, robust earnings growth and rising scale of operations (presence in two regions) will lead to a rerating of the stock,” says Nirmal Bang research report.

Read More