Stocks to Buy Today: On 7 November 2023, the financial services firm HDFC Securities published the latest research report on JK Lakshmi Cement shares, assigning a ‘buy’ rating to the stock. The comprehensive analysis also provides valuable insights into the company’s financial health.
HDFC Securities is Bullish on JK Lakshmi Cement and has recommended a ‘buy’ rating on the stock with a target price of Rs 910. Let’s take a closer look at their recommendations for the JK Lakshmi Cement share price target set by HDFC Securities.
JK Lakshmi Cement (JKLC) retains a positive outlook with a ‘BUY’ recommendation and an updated target price of INR 910 per share based on the performance metrics projected for September 2025. The company exhibited a robust 14% year-over-year (YoY) growth in the second quarter of the financial year 2024 (Q2FY24), coupled with a notable improvement in EBITDA margins, climbing by INR 143 per metric ton (MT) sequentially to INR 755 per MT.
Significantly, JKLC commenced operations of its new 1.5 million MT clinker line at the Udaipur plant in October 2023, setting the stage for heightened volume growth from the second half of FY24. The expectation is that margins will continue to improve owing to an increased proportion of trade sales, the integration of green power, and various cost-efficiency measures.
Highlighting the Q2FY24 performance, JKLC’s consolidated EBITDA surpassed estimates, with volumes increasing by 14% YoY, supported by robust demand. Net Sales Realisation (NSR) saw a 1% sequential increase. The share of trade sales rose to 62%, up from 55% from the previous quarter. Operational expenses saw a reduction, influenced by decreased input and freight costs, which fell by INR 55 and INR 30 per MT respectively. There was also a significant reduction in fuel costs by approximately INR 100 per MT.
The company conveyed in its conference call that the FY24 volume growth is expected to pick up pace, following the operationalizing of the Udaipur clinker plant. An additional grinding capacity of 2.5 million MT is anticipated to be ready by the first quarter of FY25. Other strategic moves include the addition of a 3.5MW Waste Heat Recovery System (WHRS) in Sirohi, Rajasthan, by the end of FY24, and an increase in Thermal Substitution Rate (TSR) from 4% to 16% over time. In the eastern region, the procurement of 40MW of solar power will raise the company’s green power usage to 50%.
Further cost optimization is expected with fuel costs projected to drop by ~INR 0.15/million Cal in the third quarter. Additionally, JKLC has announced a 1.3 million MT brownfield expansion in Surat, with a capital expenditure of INR 2.25 billion, scheduled in phases up to FY26, followed by further expansions in the east.
JKLC also aims to double its non-cement revenue to INR 10 billion by FY28 and has shared guidance on an annual consolidated capital expenditure of INR 12 billion for FY24 and INR 6 billion for FY25. Based on the strong Q2FY24 results, the company’s EBITDA estimates have been revised upwards by 3% for FY24, FY25, and FY26.
- Promoters: 46.31% (June 2023) and 46.31% (September 2023)
- FIs & Local MFs (Financial Institutions & Local Mutual Funds): 28.33% (June 2023) and 27.63% (September 2023)
- FPIs (Foreign Portfolio Investors): 11.50% (June 2023) and 10.53% (September 2023)
- Public & Others: 13.86% (June 2023) and 15.53% (September 2023)
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