Buy J K Cement; target of Rs 2075: Motilal Oswal

Motilal Oswal 's research report on J K Cement

JK Cement (JKCE) continued to gain market share in 2QFY21, with volume growing 26% YoY, led by ~40% capacity expansion. EBITDA grew 62% YoY to INR4.1b and was the highest ever, supported by lower cost. This in turn led to the highest ever EBITDA margin of INR1461/t. - We raise our FY21E EBITDA by 16%, factoring in lower cost and target price by 15% to INR2,075/share. We reiterate our Buy rating on a 26% EPS CAGR over FY20–22E, driven by capacity-led volume growth and better margin.

Outlook

Our TP of INR2,075 is based on FY22E EV/EBITDA of 12x for the White Cement business and 9x for the Grey Cement business. Maintain Buy.