Hold JK Cement; target of Rs 1025: Axis Direct

Axis Direct's research report on JK Cement

Grey cement volumes declined 2% YoY. Average realization increased Rs 60/ton QoQ at Rs 3,780/ton. Average cost/ton was flat. Power & fuel cost was marginally up 4% QoQ. Grey cement EBITDA/ton was Rs 510 (vs. Rs 450 in Q3FY17). White cement business EBITDA at Rs 1,030 mn (flat YoY). White cement and putty volumes were up 5% YoY at 290 KT.

Outlook

We roll over the target price to FY19 and value the company at 9x EV/EBITDA. Our revised target price stands at Rs 1,025 (8% downside from CMP of Rs 1,118) and, we maintain HOLD rating. We revise our EPS estimates for FY18E/19E to Rs 44/62 (Rs 38/55 earlier) mainly due to higher volume assumptions.