Buy J K Cement; target of Rs 5950: Motilal Oswal

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • Volume growth: JK Cement's grey cement volume grew 22% YoY, driven by healthy demand and capacity expansion. The company aims to reach 40mtpa/50mtpa grey cement capacity by FY28/FY30.
  • Premium products: The company is increasing its share of premium products, which should support margin growth. Premium products' share stood at 20% in 2QFY27.
  • Capacity expansion: JK Cement is progressing with its expansion plans, including a 4mtpa clinker unit and 3mtpa grinding unit in Jaisalmer, Rajasthan, expected to be commissioned in 1HFY28.
  • Cost management: The company is focusing on reducing its energy costs, with a target to increase its green power share to 75% by FY30.

Thesis Validation Checklist

To validate the investment thesis, watch for:

  • Volume growth: JK Cement's ability to achieve its volume guidance of 23mt in FY27.
  • Pricing power: The company's ability to pass on higher input costs to customers through price hikes.
  • Expansion progress: The timely completion of ongoing expansion projects, particularly the Jaisalmer and Bikaner units.
  • Margin improvement: The company's ability to improve its operating margins, driven by premium products and cost management initiatives.