Axis Direct Brokerage recently released stock research reports on JK Cement, focusing on share price targets, along with Result Update Q4FY24, featuring buy, hold, and sell recommendations and potential upside. Let’s delve deeper into their recommendations for JK Cement Share Price Target.
JK Cement Share Price
Revenue: JK Cement’s revenue matched the expectations. This means the money they earned from selling cement was in line with what experts had predicted.
EBITDA Margin: This is a measure of profitability. JK Cement’s EBITDA margin was also as expected. EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It gives a clear picture of the company’s core profitability.
PAT (Profit After Tax): This is the net profit after paying all taxes. Unfortunately, JK Cement’s PAT was lower than expected.
Future Estimates (FY25 and FY26)
Looking ahead, experts have made some changes to their estimates for JK Cement’s performance in the next two years.
Revenue: The revenue estimates for FY25 and FY26 have been adjusted down by 5% and 2%, respectively.
EBITDA: The EBITDA estimates have been revised down by 7% and 2%.
PAT: The PAT estimates have been reduced by 13% for FY25 and 3% for FY26.
Why These Changes?
The changes are based on a few key factors:
Higher Volume Growth Visibility: JK Cement has expanded its capacity in central India, a region with growing demand for cement. The company saw a 19% increase in volume in FY24, and it expects to keep growing at 13% per year until FY26. They are also planning to add more capacity, which will help them sell more cement.
Improved Profitability: The company has been able to cut costs, especially in power and fuel, which are major expenses for cement companies. They expect to save Rs 150-200 per tonne in the next two years. This will help improve their EBITDA margin, which is expected to be between 18% and 20%.
Central India’s Contribution: After the ongoing expansion, central India will account for about 40% of JK Cement’s total grey cement capacity. This is important because the government is focusing on infrastructure development in this region, which will increase cement demand.
Sector and Company Outlook
The outlook for the cement sector is positive, and JK Cement is well-positioned to benefit from this. The company expects to grow its volume by 10% in FY25, despite some short-term challenges like the upcoming elections. They believe the overall industry will grow by 7-9%.
Current Valuation and Target Price
Right now, JK Cement’s stock is valued at 13 times its expected earnings for FY26. The target price for the stock has been set at Rs 4,340 per share, down from the earlier target of Rs 4,400. This still implies an 11% upside from the current market price.
JK Cement has shown strong performance in the past year and has solid plans for the future. Despite some short-term challenges, the company’s expansion in central India and cost-cutting measures are expected to drive growth. With a positive outlook for the cement sector, JK Cement’s share price target of Rs 4,340 suggests there is still room for growth.
JK Cement Share Price Target
| Date | 15th May 2024 |
| CMP (Rs) | Rs.3,922 |
| Target Price | Rs.4,340 |
| Upside /Downside (%) | 11 |
| Recommendation | BUY |
| Market cap (Cr) | 30,297 |
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