JK Lakshmi Cement - New Capacity Expansion To Drive Growth: Axis Securities

Axis Securities Report

Cement demand is expected to moderate in the short term due to subdued demand and pricing pressures stemming from increased competitive intensity. However, from a medium to long-term perspective, cement demand is anticipated to remain robust, driven by higher capital expenditure on infrastructure and housing projects.

JK Lakshmi Cement Ltd. is expanding its capacity to meet the expected increase in demand and to gain market share in its operating regions while also exploring opportunities in new geographies. We project JK Lakshmi Cement to achieve Ebitda/adjusted profit after tax growth of 18%/21% CAGR over FY24-26E.

The stock is currently trading at 10 times and eight times FY25E and FY26E enterprise value/Ebitda.

We value JK Lakshmi at 9.5 times FY26E EV/Ebitda and assign a Buy rating to the company with a target price of Rs 950/share, implying an upside of 21% from the current market price.

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