Motilal Oswal's research report on JK Cement
JK Cement (JKCE) reported higher-than-estimated consolidated EBITDA of INR6.3b (est. INR5.8b) in 3QFY24, fueled by lower-than-estimated variable costs and higher white cement realization. EBITDA/t stood at INR1,330 (est. INR1,230), and adj. PAT was at INR2.8b (est. INR2.3b) during the quarter. JKCE announced capacity expansion of 6mtpa spread across the Central and East (Bihar) regions, which are likely to be commissioned by FY26. The management expects further cost savings of INR30-40/t in 4QFY24, and the commissioning of WHRS at its Karnataka plant would lead to energy cost savings in 1QFY25E.
Outlook
We raise our EBITDA estimates by 2%/6%/7% for FY24/FY25/FY26, led by higher volumes, cost savings, and improved performance in 9MFY24. We believe JKCE is best placed among the regional players, given its expansion plans and strong execution strategy. We value JKCE at 14x FY26E EV/EBITDA to arrive at our revised TP of INR4,700. Reiterate BUY.
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