February 08, 2017 / 17:44 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.
OutlookJKCE will be one of the biggest beneficiaries of price and demand uptick in North. Steady volumes and EBITDA growth in white cement cushion downside risks, if any, from price volatility in grey cement. With RoE of 20% in FY19E, we arrive at TP of INR 955 using our valuation framework. We maintain ‘BUY/SO’. Our TP implies exit EV/t of USD120 and exit EV/EBITDA of 9x FY19E.
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