JK Cement Q2 Results Review - Muted QoQ; Fair Valuation; Maintain 'Sell': Dolat Capital

Dolat Capital Report

JK Cement Ltd.’s Q2 FY25 volume/revenue/realisation came in-line, however Ebitda, Ebitda/tonne and adjusted profit after tax were below estimates.

We expect revenue/Ebitda/APAT CAGR of 8.6%/13.0%/16.9% over FY24-27E led by 5.1%/9.3%/15.7% blended volume growth and -3.2%/ +0.9%/-1.4% blended realization growth in FY25E/FY26E/FY27E.

We maintain a positive outlook on JK Cement due to-

1. its continuous capacity addition,

2. healthy cash generation and

3. strong RoE.

However, we have decreased our FY25E/FY26E Ebitda estimates by -8.4%/-5.9%, post factoring lower blended volume coupled with higher opex/tonne, while also introducing FY27E. The current market price factors most of the positives. Accordingly, we maintain our ‘Sell’ rating with revised target price of Rs 4,140 based on 12 times consolidated FY27E enterprise value/Ebitda + 50% FY27E capital work-in-progress.

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