Buy JK Cement; target of Rs 5050: Motilal Oswal

Motilal Oswal's research report on JK Cement

JK Cement (JKCE) has once again demonstrated superior execution capabilities after the commissioning of its new plant at Panna, Madhya Pradesh (MP). The company achieved a capacity utilization of ~90% within one year of commissioning, which helped the company deliver higher-thanindustry volume growth. JKCE has further plans to expand the capacity at Panna. Along with the 3QFY24 results, the management announced a clinker capacity expansion (10,000tpd or 3mtpa) at Panna and associated grinding units in the Central region and Bihar (cumulative capacity: 6mtpa). We believe that JKCE has the potential to reach 50mtpa+ capacity in the long run, as it follows a disciplined expansion approach.

Outlook

Considering JKCE’s long-term and well-planned growth strategy, higher capacity utilization, as well as improving regional mix, we have raised our target multiple to 15x FY26E EV/EBITDA (earlier 14x) to arrive at our revised TP of INR5,050 (vs. INR4,700). We reiterate our BUY rating on the stock.