Buy JK Cement; target of Rs 6000: Emkay Global Financial

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • JKCE's grey cement volume grew 21% yoy, driven by the ramp-up of the Panna line-2 unit, with the company on track to reach ~40mtpa by 1HFY28.
  • Blended realization rose ~3% qoq, led by ~8% growth in white cement, while grey cement realization was flat qoq.
  • The company expects sequential margin recovery despite higher fuel consumption cost, with FY27E/28E/29E EBITDA/t at Rs960/1,080/1,100, respectively.
  • At 13.5x 1YF EV/EBITDA, JKCE is trading at inexpensive valuations given RoCE ranging at 15-16%.

Thesis Validation Checklist

  • Investors should watch for sequential margin recovery, driven by higher realization and operating leverage.
  • The company's ability to maintain its market share in the face of increasing competition will be crucial.
  • Any significant changes in fuel costs or other input costs could impact the company's margins.
  • The successful commissioning of new capacity additions, particularly the Jaisalmer IU and the Bikaner and Bhatinda GUs, will be key to the company's growth plans.