Motilal Oswal's research report on JK Lakshmi Cement
JKLC’s 4QFY25 EBITDA was above our estimate, led by higher-than-estimated volumes (~3% beat) and realization/t (~5% beat). Consol. EBITDA increased 4% YoY to INR3.5b (~20% beat). EBITDA/t declined 5% YoY to INR976 (est. INR837) and OPM was flat YoY at ~19% (est. ~17%). PAT (adjusting for tax reversals) grew ~23% YoY to INR1.9b (~34% beat). Management targets volume growth of ~10% in FY26 vs. expected industry growth of 6.5%-7.0%. Cost efficiency measures are estimated to deliver INR100-120/t in cost savings in the next 12-18 months. On expansions, 1.35mtpa Surat GU will be commissioned in phases during Jun-Dec’25, while the Durg integrated unit is targeted for 3QFY27. The northeast project saw a delay due to political and local issues. However, JKLC is committed to achieving its 30mtpa capacity target by FY30 (vs. 16.4mtpa currently).
Outlook
We raised our FY26E/FY27E EBITDA by ~5% each, led by higher realization estimates given the higher exit-FY25 realization. We raised our EPS estimates by ~8%/14% for FY26/FY27, aided by lower depreciation estimates and lower ETR (opting for lower tax rate under new tax regime). The stock is trading at 11.0x/9.0x FY26E/FY27E EV/EBITDA. We value the stock at 10x FY27E EV/EBITDA to arrive at our TP of INR1,000. Maintain BUY.
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