Buy JK Cement; target of Rs 1150: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on JK Cement

JK Cement saw strong profit growth in Q1FY20 on the back of a strong pricing environment during the quarter. Revenues for the quarter were at Rs 1328 crore (marginally below I-direct estimate of Rs 1348 crore). The revenue growth was supported by 19.4% growth in blended realisations to Rs 5754/t (above I-direct estimate of Rs 5437/t). Blended volumes remained flat YoY at 2.31 MT (vs. I-direct estimate of 2.48 MT). EBITDA/t and EBITDA doubled YoY to Rs 1315/t (vs. I-direct estimate of Rs 1112/t) and Rs 303.5 crore (vs. I-direct estimate of ~Rs 276 crore) respectively. Led by a strong operational performance, PAT jumped 212% YoY to Rs 153.8 crore YoY.

Outlook

The company currently is in an expansion phase. Led by additional debt required to fund these expansions, debt is expected to breach Rs 3100 crore. However, with higher volumes and improving margins, the debt/EBITDA ratio is expected to improve to 2.5x in FY21E from 2.9x in FY21E. Also, taking into consideration the current valuations, we maintain BUY recommendation on the company, with a target price of Rs 1150.

For all recommendations report, click here

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