JK Lakshmi Cement - Better Operating Performance Expected; Retain 'Buy': Axis Securities

Axis Securities Report

Cement demand is expected to remain robust on the back of higher government thrust on developing infrastructure, better real estate demand, private capex and higher individual home builders demand.

Furthermore, capacity expansion and many strategic initiatives are expected to improve JK Lakshmi Cement Ltd.’s Ebitda/tonne to Rs 900/Rs 970 in FY25E/FY26E from the current Rs 700/tonne.

We expect the company to deliver revenue/Ebitda/adjusted profit after tax growth of 10%/24%/26/% compound annual growth rate over FY23-FY26E backed by robust volume growth CAGR of 8% over the same period.

We roll over our estimates to FY26 and value the company at 8.5 times FY26E enterprise value/Ebitda to arrive at the target price of Rs 1,000/share, implying an upside potential of 16% from the current levels.

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