Buy JK Cement; target of Rs 3856: ICICI Securities

ICICI Securities research report on JK Cement

JK Cement’s (JKCE) Q1FY24 performance stood strong, being one of the few cement companies to report a QoQ margin improvement of ~170bps (EBITDA stood 15% ahead of estimates). We see scope of further margin improvement owing to near-term benefits of a) incentives from new Panna unit (in Madhya Pradesh); b) and savings from the recently commissioned WHRS plant of 22MW at Panna and the upcoming 16MW in Muddapur (Karnataka). In the medium term, margins have the potential to scale up from c) reduction in clinker factor (post ramp-up of the upcoming split grinding units at Ujjain (Madhya Pradesh) and Prayagraj (Uttar Pradesh) and d) JKCE’s efforts to pursue fixed cost reduction. Overall, JKCE remains a compelling investment story.

Outlook

Maintain BUY with an unchanged TP of INR 3,856.

For all recommendations report, click here