JK Lakshmi Cement - Accelerating The Market Footprint: Motilal Oswal

Motilal Oswal Report

We estimate a cumulative operating cash flow (consolidated) of Rs 32 billion and capex (consolidated) of Rs 35 billion over FY24-26. Its consolidated net debt is estimated to increase to Rs 20b by FY26 from Rs 10 billion in FY23 and net debt-to-Ebitda is expected at 1.4 times in FY26 versus 1.2 times in FY23.

We believe timely capacity addition by JK Lakshmi Cement will help it to maintain its capacity/ market share. The stock is currently trading at 8.2 times/6.7 times FY25/FY26E enterprise value/Ebitda and $67/$57/tonne (at a significant discount to the replacement cost).

JK Lakshmi Cement’s robust expansion plans, improvement in profitability, and higher return ratios (return on equity/return on capital employed of 16%/13% in FY26E) warrant a re-rating of the stock.

We value JK Lakshmi Cement at nine times FY26E EV/Ebitda and arrive at a target price of Rs 1,030 and reiterate our Buy rating on the stock.

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