ICICIdirect.com's report on J. K. Cement
JK Cement in Q4FY15 met our volume guidance of 1.9 MT vs. actual sales volumes of 1.9 MT. However, higher sales realisations led to a better-than-expected topline growth during the quarter. Revenues were up 10.1% YoY to Rs 911.4 crore led by volume (blended) growth of 10.3% YoY to 1.91 MT
White cement EBITDA/tonne improved 5.0% YoY to Rs 3103/tonne. The blended EBITDA/tonne declined 8.7% YoY to Rs 832/tonne (above I-direct estimate of Rs 640/tonne) mainly due to 17.0% YoY decline in grey cement EBITDA/tonne to Rs 519/tonne
Reported PAT declined 8.6% YoY to Rs 69.8 crore due to 83.4% YoY increase in interest cost led by capacity expansion
Consolidated gross debt of the company stood at Rs 3000 crore of which the company has ~Rs 600 crore of dollar debt
"With incremental cash generations from new capacity, we expect the debt level to peak out in FY15. However, a domestic slowdown in demand would likely drag overall profitability of the company during H1FY16. At the CMP of Rs 602, the stock is trading at 10.6x its FY16E and 8.1x its FY17E EV/EBITDA, respectively. On an EV/tonne basis, the stock is trading at $91 on FY17E capacity of 11.7 MT. Although we remain positive on the company from a longer-term perspective, moderation in domestic demand and slowdown in GCC remain near term concerns. Hence, we maintain HOLD rating with a revised target price of Rs 650/share (i.e. at 8.5x FY17E EV/EBITDA, $95/tonne on FY17E capacity (11.7 MT)", says ICICIdirect.com research report.
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