Buy JK Cement; target of Rs 1175: Edelweiss

Edelweiss's research report on JK Cement

The Board of Directors of JK Cement (JKCE) recently approved raising funds of up to INR10bn and will seek shareholders’ approval at the upcoming AGM. Details of intended fund usage (including expansion projects) are yet to be finalised and will be made public post appropriate approvals. Given headroom to grow volumes only for next 3 years at its facilities in North (assuming 8% growth p.a) and lead time of a similar 2.5- 3 years for commissioning new capacities, contemplating an expansion is timely in our view.

Outlook
With a positive stance on the grey cement sector and factoring steady growth in JKCE’s niche white cement business, we maintain ’BUY’ with TP of INR1,175, implying 10.5x FY19E EBITDA.

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