Buy JK Cement; target of Rs 1180: Centrum

Centrum's research report on JK Cement

While strong volume growth across both grey (+29% YoY) and white/putty (+11 YoY) drove 28% standalone revenue increase, grey realisation remained insufficient to pass on the cost inflation. Thus, EBITDA fell 5% YoY. On a downward revised PAT base of Q4FY17 and led by lower interest expense, PAT surged 105% YoY.

Outlook

We expect JKCE’s net D:E to remain stable at 1x during FY18-20E (vs 1.6-1.8x during FY15-17), on account of good internal accruals and stable working capital. We maintain BUY with a revised TP of Rs1180 (10x its FY20E consolidated EBITDA). For all recommendations report, click here

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