Buy JK Cement; target of Rs 395: Microsec

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26 Aug, 2025 12:21

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Microsec is bullish on J. K. Cement and has recommended buy rating on the stock with a target of Rs 395 in its December 21, 2012 research report.
 
“We rate JK Cement Limited a BUY. JK Cement is one of the largest cement manufacturers in North India and second largest producer of white cement in India. The company exports white cement to countries like South Africa, Nigeria, Singapore, Bahrain, Bangladesh, Sri Lanka, Tanzania, UAE and Nepal. The Company produces 53-grade, 43- grade and 33-grade Ordinary Portland Cement (OPC) grey cement, Portland Pozzolana Cement ('PPC') under grey and white cement. JK Water proof is another product from JK Cements used for flooring, wall application and other specialized applications.”
 
“JK cement is one of the largest cement players in North and caters to North and Central India majorly followed by south and western India. It deals in grey and white cement production. Currently the grey cement capacity is 7.5mn tons and White cement capacity is at 0.4mn tons. White cement is an advantage on margin front which is a high margins segment. The Company has registered a strong financial growth in FY12. Its Net sales increased by 22% to INR2547 crore and PAT improved by 178% to INR175 crore. Its EBITDA margin also improved from 13.2% to 20.2%. ROE of the company came at 14.4%. Its total D/E ratio also came down marginally from 1.2 to 1.0. JK cement’s financial ratios are strong and are very much in line with top cement players like Ultratech Cement, ACC, Ambuja Cement and Shree Cement.”
 
“India is the second largest cement market after China, accounting for 7-8% of the total global production with an installed capacity of 310 mtpa. The cement industry is spread across five geographic regions - South, North, West, Central and East. The Southern region of India has a total installed capacity of 120.1 mtpa (38.7% of total India’s cement capacity), followed by North with 67.3 mtpa (21.7% of total India’s cement capacity). Whereas, the Western region has a total capacity of 44.7 (14.4% of total India’s cement capacity), Central India has a total capacity of 40.2 mtpa (13.0% of total India’s cement capacity) and Eastern India has a total installed capacity of 37.6 mtpa (12.1% of total India’s cement capacity).”
 
“At the CMP of INR337, the stock discounts its FY13E EPS of INR37.2 by 9.1x and its FY14E of INR46.5 by 7.3x. JK cement is attractively priced at the current level, considering its higher EBITDA margin and sound ROE. We assign a P/E multiple of 8.5x on its FY14E EPS to arrive at the target price of INR395 for the stock,” says Microsec research report.

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