Pick Of The Week: Buy This Mid Cap Cement Stock With Target Price Of Rs 2920: Axis Securities

Axis Securities remains bullish on mid-cap cement sector stock JK Cement Ltd with a target price of Rs 2920 apiece. If you buy the stock now, investors can expect to receive a potential return of up to 12%. It has a market capitalisation of Rs 20,154 crore. The company came into existence in 1994. Check key takeaways below:

1. JK Cement Stock Outlook & 5-Years Return

The current market price of JK Cement is Rs 2609 apiece with an intraday decline of 0.77%. The stock's 52-week high is Rs 3836 apiece and 52-week low is Rs 2005 apiece, respectively. The stock has given a return of 160% in last 5-years, 128% in last 3-years, and declined 18% in last 1-year.

2. JK Cement Growth Prospects

According to Axis Securities, "JKCL is currently expanding its Grey Cement capacity by 4 mtpa which will get commissioned in Q3FY23 taking the total capacity to 18.7 mtpa. With the coming up of new capacities, the company has the opportunity to capture further market share in demand accretive Central India market with less volatile pricing trajectory. Further it is planning to expand its Grey Cement capacity by another 4 mtpa by setting up units in MP and UP. We expect volume CAGR of 14% over FY21-24E which is significantly higher than the estimated industry growth of 8% CAGR over the same period."

3. JK Cement Valuation

According to Axis Securities, "White cement and Wall Putty business contributes around 30% of overall revenue with high EBITDA margin ranging between 25-28%. We expect white cement business to grow at a CAGR of 8% over the period FY21-24E . This will help in blended realization to improve from Rs.5700/tonne in FY21 to Rs.6050/tonne in FY24E. We expect overall EBITDA margin to improve from current 17% to 19% in FY24E. With expanded capacity, better pricing increased demand and cooling off in commodity prices we expect JKCL to report Revenue/EBITDA/APAT CAGR of 14%/15%/11% respectively over FY21-FY24E. Stock is currently trading at 16x and12x FY23E/FY24E EV/EBITDA."

About JK Cement

JK Cement Ltd is one of India's leading manufacturers of Grey Cement and one of the leading White Cement manufacturer in the World. Over four decades, the Company has partnered India's multi-sectoral infrastructure needs on the strength of its product excellence, customer orientation and technology leadership.

JK Cement's operations commenced with commercial production at its flagship grey cement unit at Nimbahera, Rajasthan in May 1975, according to its official website.

Disclaimer

The stock has been picked from the brokerage report of Axis Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.