Buy J.K.Cement; target of Rs 454: Reliance Securities

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26 Aug, 2025 12:21

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Reliance Securities's research report on J. K. CementJ.K. Cement’s (JKC) 3QFY16 operating performance was ahead of expectation as EBITDA came in at Rs1.25bn (+28% yoy) v/s expectation of Rs1.12bn. EBITDA/ tonne (blended) came in at Rs623 v/s Rs565 and Rs582 reported in 3QFY15 and 2QFY16, respectively. Notably, grey cement EBITDA/tonne remained subdued and stood at Rs257 as against Rs244 in 3QFY15. We continue to believe that possible improvement in utilizations in Southern plants and likely price recovery in Northern markets are key catalysts to improve grey cement operating performance. Further, possible deleveraging of balance sheet from FY17E will aid it to gain further traction in profitability. Nevertheless, we cut our EBITDA estimates by 6%/24% for FY16E/ FY17E, respectively largely to factor in subdued realizations. We maintain our BUY recommendation on the stock with a revised Target Price of Rs630 (Rs700 earlier). We look forward to JKC’s performance to augment further in subsequent years on the back of expected demand recovery in Southern and Western markets and reversal in Northern prices. We revise EBITDA estimates downwards by 6%/24% for FY16E/ FY17E, respectively largely to factor in subdued realizations and also introduce FY18E estimates. We maintain our BUY recommendation on the stock with a revised Target Price of Rs630.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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