JK Lakshmi Cement - Levers In Place To Improve Performance: Nirmal Bang

Nirmal Bang Report

Currently operating with a capacity of ~16.5 million tonnes per annum, JK Lakshmi Cement Ltd. is focused on maintaining a significant presence in key markets across North East and West India while aiming to expand its footprint in the South and North-East.

The company's growth trajectory is set to reach a target of 30 mtpa by 2030 on the back of ongoing projects, including a 4.6 mtpa expansion in the East and new mining leases.

In future, cement prices across India are expected to stabilise and become more uniform due to increasing capacities and heightened competition, which will balance price differences among the regions.

We expect JK Lakshmi Cement to report revenue/Ebitda/profit after tax compound annual growth rate of 10%/17%/23% over FY24-FY26E. The company is trading at 7.8 times FY26E enterprise value/Ebitda, which is lower than the five-year average of 8.4 times.

We have maintained "Buy", valuing JK Lakshmi Cement at nine times June-26E EV/Ebitda with a revised target price of Rs 912, underpinned by strategic positioning in the key North, West and East markets.

The company is expected to grow on the back of stable realisations, higher volume, cost-saving initiatives, blending ratios, sufficient limestone reserves and direct dispatches.

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