HDFC Securities Recommends To 'Buy' This Cement Stock For 15% Returns In 1 Year

Target Price

The Current Market Price (CMP) of JK Cement is Rs. 3534, till November 20. The brokerage firm, HDFC Securities has estimated a Target Price for the stock at Rs. 4,070. Hence the stock is expected to give a 15% return, in a Target Period of 1 year.

Company performance

JK Cement (JKCE) Q2FY22 EBITDA at Rs. 3.5bn (adjusted for Rs. 260mn impairment charge), down 14% YoY, was broadly in line with consensus estimates. The company's standalone revenues are up 18% YoY to Rs. 18.0bn, broadly in line with estimates. Grey cement volumes including clinker sales increased 20% YoY and 6.6% QoQ. Management is targeting commissioning of 4 mnte Panna expansion at a CAPEX of Rs. 30 bn by Mar'23, which would drive strong ~15% volume CAGR over FY21-FY24E.

Comments by HDFC Securities

HDFC Securities said, "Our recent channel checks suggest companies have increased prices by Rs. 20-25/bag across regions. We maintain BUY on the stock with a revised target price of Rs. 4,070/sh (earlier: Rs. 3,700) based on 14x Dec'23E EV/E." On the risks font, the brokerage firm mentioned the company's lower demand/pricing.

About the company

JK Cement Ltd. is one of India's leading manufacturers of Grey Cement. It has an installed Grey Cement capacity of 15 MnTPA, and JKCL is the No. 1 manufacturer of Wall Putty in the World and the third-largest manufacturer of White Cement, globally, with a total white cement capacity of 1.20 MnTPA and wall putty capacity of 1.2MnTPA. JK White Cement is sold across 43 countries.

Disclaimer

The above stock was picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.