JK Cement Q1 Results Review - Volume Growth Momentum To Continue: Centrum

Centrum Broking Report

JK Cement Ltd. reported good set of results, amidst challenging environment, with reported Ebitda of Rs 4.86 billion, 7% ahead of our estimates driven by lower than expected costs. The company was able to control the costs at Rs 4,760/million tonne (down 7% YoY and 3% QoQ) largely driven by lower other expenses.

The company is on track to reach 30 million metric tonne capacity by FY26 which will ensure steady volume growth and market share gains.

Additionally, the management expects to reduce operating costs by Rs 150-200/mt over the next two years which will help offset weakness in pricing. We expect the company’s capex strategy to deliver 325 basis points improvement in pre-tax return on capital employed from FY25-26E.

We have maintained our earnings estimates for the company and revised our target multiple from 13 times to 14 times to arrive at our revised target price of Rs 4,682 (Rs 4,246 earlier).

Upward revision in multiple is on account of-

1. superior capex strategy,

2. sustained increase in market share and

3. further improvement in efficiency through lower costs.

We maintain our Add rating on the stock.

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