JK Cement’s (JKCE) recent capacity additions in high utilisation / better pricing markets of North / Central regions are likely to see a quick ramp-up along with better cost efficiencies. Consolidated net debt is likely to peak out at Rs24bn in FY21E as JKCE could generate OCF of >Rs10bn p.a. from FY22E which would be sufficient for its future capex requirements. Besides, JKCE enjoys better than peers' RoEs of 16-18% over FY20-22E. Factoring higher utilisation, we raise our FY22E EBITDA / EPS by 4-6%.
OutlookWith improving growth / market share and profitability, we raise our target multiple to 10x (earlier 9x) and increase our target price to Rs1,725/share (earlier: Rs1,460) based on 10x FY22E EV/E. Maintain BUY.
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