February 10, 2017 / 15:20 IST
The UAE subsidiary’s profitability suffered on weak demand and high fuel costs. Cement demand is inching towards normalcy in India and we expect JKCE to deliver 25% consolidated EBITDA CAGR during FY16-19E led by steady growth in its white/putty segment in India, a rebound in its grey cement profit, and higher utilisation at its UAE plant. We expect its Net D:E to moderate to 0.7x in FY19E vs 1.7x in FY16 benefitting from strong operating cash-flow and lower capex.
Outlook
JK Cement (JKCE) delivered strong estimate beating Q3FY17 results and we have upgraded the stock to Buy (from Hold earlier) with revised TP of Rs 1,007. Standalone EBITDA/PAT rose 18%/284% YoY to R s1.48bn/ Rs 0.66bn even though revenue dipped 2% YoY to Rs 8.88bn. EBITDA rose across both grey and white cement businesses. While demand weakened on account of demonetisation, cost controls and stable fuel costs QoQ moderated the earnings impact.
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