February 10, 2017 / 16:54 IST
JK Cement’s Q3FY17 results were above our estimates. JK Cement’s revenues declined 1.6% YoY to Rs 887.8 crore (above I-direct estimate of Rs 857.3 crore) mainly led by 6.1% YoY decline in grey cement revenues to Rs 590 crore (driven by lower volumes: down 5.8% YoY). However, white cement revenues increased 5.2% YoY to Rs 298 crore driven by capacity expansion in wall putty.
Outlook
This, coupled with the recent correction in stock price provides a good entry point. Hence, we upgrade the stock from HOLD to BUY and maintain our target price of Rs 990 (i.e. at 12x FY18E EV/EBITDA, $127/tonne on FY18E capacity of 11.8 MT).
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