JK Lakshmi Cement Q2 Results Review - Performance Lower Than Expectation: Nirmal Bang

Nirmal Bang Report

We have cut our estimates for FY25 by 3.9%/10%/17.5% for revenue/Ebitda/PAT due to a miss in our estimates for Q2 FY25. An enhanced H2 is expected to yield results that may align more closely with our earlier consolidated forecast. We have adjusted our FY26 estimates, decreasing Revenue, Ebitda and PAT by 3.4%, 10.8% and 20.4%, respectively.

We contend that FY25 represents a temporary setback for the industry, with the company poised for recovery through capacity expansions (~14 million tonnes per annum from FY19-23, projected to reach 24.1 mtpa by FY27E) and an anticipated increase in demand within the company’s primary markets, alongside operational efficiencies resulting from cost-saving initiatives.

The company is trading at 7.4 times FY27E EV/Ebitda, lower than the five-year average of 8.5 times. We maintain our "Buy" recommendation, valuing the business at nine times September FY26E EV/Ebitda with a revised target price of Rs 887 based on strategic positioning in the key North, West and East markets.

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