JK Lakshmi Cement stocks: Accumulate JK Lakshmi Cement, target price Rs 555: Prabhudas Lilladher

Prabhudas Lilladher has accumulate call on with a target price of Rs 555. The current market price of JK Lakshmi Cement is Rs 479. Time period given by analyst is one year when the company’s price can reach defined target.

JK Lakshmi Cement, incorporated in the year 1938, is a mid cap company (having a market cap of Rs 5558.15 crore) operating in cement sector.

It’s key products/revenue segments include cement, others and other operating revenue for the year ended March 31, 2022.

Financials

For the quarter ended June 30, 2022, the company has reported a consolidated total income of Rs 1661.05 crore, up 2.81 per cent from last quarter total income of Rs 1615.66 crore and up 23.74 per cent from last year same quarter total income of Rs 1342.36 crore. Company has reported net profit after tax of Rs 115.08 crore in latest quarter.

The company’s top management includes Mr.Bharat Hari Singhania, Mrs.Vinita Singhania, Mr.B V Bhargava, Dr.Raghupati Singhania, Mr.N G Khaitan, Mrs.Bhaswati Mukherjee, Dr.K N Memani, Mr.Ravi Jhunjhunwala, Mr.Arun Kumar Shukla. Company has S S Kothari Mehta & Co as its auditors. As on June 30, 2022, the company has a total of 12 crore shares outstanding.

Investment Rationale
1) Target to augment capacity by more than double to 30mnt by 2030 from current 14mnt

2) Greenfield plants at mines acquired in Rajasthan and Gujarat would be part of the capacity growth plan

3) Maintained capex guidance of Rs7bn/Rs9bn for FY23e/FY24e in

(UCWL) towards its 2.5mnt brownfield expansion having total outlay of Rs16.5bn

4) Spent Rs3.5bn on the project till Q1FY23

5) Commissioning of expansion project on track for commissioning in March-24

6) Share of pet coke further reduced by 1500bps QoQ to 41%; Thermal coal’s share increased 1600bps to 46% with AFR’s share in the mix stable at 13%

7) Share of trade sales remained stable at 56%

8) Blended coal cost increased by 30% QoQ to Rs11,700/t in Q1FY23

Promoter/FII Holdings
Promoters held 46.31 per cent stake in the company as of June 30, 2022, while FIIs owned 12.14 per cent, DIIs 25.21 per cent.