Target: ₹3,164

CMP: ₹3,096.05

JK Cements reported results largely in line with our estimate at EBITDA level. The company has restated its financials to factor in the effect of amalgamation of its subsidiary Jay kay cem central ltd (recently commissioned Panna and Hamirpur plants) with the parent and as a result, Q1-FY24 and Q4-FY23 numbers have been restated.

On consolidated basis, the company delivered impressive volume growth of 25 per cent for Q1-FY24 on account of ramp-up of Panna and Hamirpur. The company has achieved utilisation of 75 per cent at its new plants within a short span of 9 months. It has also commissioned 22MW WHRS plant at Panna during the quarter which is likely to improve margins for the company going forward.

Power & Fuel consumption cost for Q1-FY24 stood at ₹2.2/kcal as against ₹2.5/kcal in Q4-FY23. The management has indicated that coal cost should reduce to ₹2/kcal in Q2-FY24 and ₹1.8/kcal Q3-FY23.

We have marginally tweaked our estimates and maintain our TP of ₹3,164 for the company. We also maintain our Reduce rating on the stock on account of fair valuations of 12.5x FY25 EV/EBITDA, which we believe factors in the growth potential adequately.