February 07, 2017 / 15:50 IST
JK Cement (JKCE) sprung a positive surprise in Q3FY17 led by better-than expected sales volume and realisation. While grey cement volumes were down 6%, white + putty rose 5% YoY. Overall cost/t was down 1% QoQ aided by lower other costs and broadly stable energy costs. According to management guidance, energy cost could jump only by INR25-30/t QoQ in Q4FY17 considering that JKCE anticipates its pet coke prices to rise by only USD5-6/t.
OutlookThis indicates that the company will be comfortably able to meet our FY17E revised EPS of INR30. JKCE has repaid INR 1.4bn debt in 9mFY17 and may continue to prune it further. Maintain ’BUY’ with revised TP of INR955 (INR 915 earlier), implying 15x FY19E EPS.
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