Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Google
Web www.equitybulls.com
Research

| More

Maintain BUY on JK Lakshmi Cement - Strong margin uptick; Healthy balance sheet - HDFC Securities

Posted On: 2020-05-22 14:11:38


Mr. Rajesh Ravi, Institutional Research Analyst, HDFC Securities.

JK Lakshmi Cement (Q4FY20): Strong margin uptick; Healthy balance sheet. Maintain BUY
(TP Rs 370, CMP Rs 206, MCap Rs 24 bn)

We maintain BUY on JK Lakshmi Cement with a TP of Rs 370. A sharp 16% vol dip in 4QFY20 pulled down FY20 vol by 5% YoY. The Covid impact will further pull down FY21E volume by 16% YoY. However, we build in 21% vol recovery in FY22E. This along with falling energy costs in FY21 to limit standalone EBITDA decline CAGR at 3% during FY20-22E. Healthy cash flows keep leverage comfortable and support capex acceleration FY22E onwards. In 4QFY20, despite lower vols, healthy pricing in the north/Guj markets boosted standalone EBITDA/APAT by 54/133%.

EBITDA Margin surges to 30-qtr high; despite sharp sales' decline: Sales vol fell 16% YoY (+6% QoQ) to 2.5mn MT, hit hard by Covid led lockdown, pulling down cem utilisation to 70% vs 96/80% YoY/QoQ. Higher share of clinker (13% vs 7/7% YoY/QoQ) in total sales flattened NSR QoQ. However, NSR remained 8% up YoY, benefitting from buoyant pricing in the north/Guj markets. This, along-with lower unitary opex (lower energy cost tailwinds) boosted unitary EBITDA by 84/26% YoY/QoQ to Rs 820/MT (30-qtr high)! Hence despite 10% revenue fall, EBITDA/PAT rose 54/133% YoY.

Balance sheet firmed up on healthy cashflows, lower capex in FY20: Solid pricing in the north/Guj regions boosted 10% NSR gain in FY20, which more than offset 5% vol loss and unitary EBITDA grew to its 7-yr high of Rs 732/MT. Falling petcoke prices and logistics cost control also boosted margin expansion. Thus, EBITDA/APAT soared 62/221% YoY. Amid low capex spends, JKLC's gross/net debt fell 10/18% YoY to Rs 14.5/10bn resp and its net Debt/EBITDA halved to 1.5x YoY (10-yr low).

Concall / capex updates: The co is adding a 10MW WHRS in Sirohi by Mar'21E and its subs - Udaipur Works will debottleneck its clinker capacity by 0.3mn MT. It will start work on a 2.5mn MT brown-field expansion in Raj in FY22E, after the Covid situation normalizes. Thus, total capex outflow during FY21-22E in our view should be lower at Rs 8bn vs our earlier est of Rs 12bn. This should keep leverage under check amid earnings decline in the same period. We estimate net Debt/EBITDA to remain under 2x.

Maintain BUY: We have reduced EBITDA est for FY21/22E by 4/4% each as we factor in higher impact of Covid and build in EBITDA to decline at 3% CAGR during FY20-22E. We value the standalone cement biz at 8x FY22E EBITDA and value its 72.5% holding in Udaipur Cement Works at 20% disc. Thus, our SOTP based TP remains unchanged at Rs 370. We continue to like the co for its large presence in north markets and on increased cost controls

Shares of JK LAKSHMI CEMENT LTD. was last trading in BSE at Rs.206 as compared to the previous close of Rs. 199.35. The total number of shares traded during the day was 119171 in over 4384 trades.

The stock hit an intraday high of Rs. 220.8 and intraday low of 201. The net turnover during the day was Rs. 25091686.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Maintain REDUCE on Britannia Industries - 4Q lags other food cos, guiding for strong 1Q - HDFC Securities

Downgrade to ADD on InterGlobe Aviation - Cloudy skies - HDFC Securities

Maintain REDUCE on V-Guard Industries - Miss on all fronts - HDFC Securities

Maintain ADD on Voltas - UCP steals the show - HDFC Securities

Maintain ADD on Multi Commodity Exchange - Speedy recovery - HDFC Securities

Maintain BUY on V-MART - Top-line disappoints; Margins surprise positively! - HDFC Securities

Maintain ADD on United Spirits - Q4FY20 Results Review - HDFC Securities

KEC INTERNATIONAL - Stock Recommendation - BUY - Geojit

Bajaj Finance Limited - Healthy performance amid lockdown - Geojit

Maintain BUY on NCC - Execution recovery awaited - HDFC Securities

Maintain ADD on Lupin - Margin recovery holds the key - HDFC Securities

Maintain BUY on KEC International - Well placed amidst headwinds - HDFC Securities

Maintain BUY on Dilip Buildcon - Balance sheet recovery - HDFC Securities

Maintain BUY on Radico Khaitan - Outperformance continues - HDFC Securities

Maintain REDUCE on Symphony - Beat in 4Q, seasonal worry remains the same - HDFC Securities

Maintain BUY on Majesco - Niche and focussed - HDFC Securities

Maintain BUY on Federal Bank - Challenges more than factored in - HDFC Securities

Maintain BUY on Max Financial - Worst is behind - HDFC Securities

Maintain REDUCE on Dabur - Weak performance, Share gain continues - HDFC Securities

Maintain ADD on Sun Pharma - Specialty scale up delayed - HDFC Securities

Stock Recommendation - Supreme Industries - Accumulate - Geojit

Downgrade to ADD on Aditya Birla Fashion and Retail - Growth gets dearer; Leverage could bite! - HDFC Securities

Maintain ADD on Torrent Pharma - Stable performance, Resilient outlook - HDFC Securities

Analysis on ITC acquiring 100% equity stake in Sunrise Foods Pvt Ltd - HDFC Securities

Maintain ADD on Trent - Savings in Cost of Retailing > GM dilution - HDFC Securities

Maintain SELL on Avenue Supermarts - Un-DMARTesque! - HDFC Securities

Maintain ADD on DCB Bank - Attractive amidst visible headwinds - HDFC Securities

Maintain ADD on Colgate Palmolive - Muted Q4, signs of improving execution - HDFC Securities

Maintain BUY on JMC Projects - Long wait - HDFC Securities

Maintain BUY on Kalpataru Power Transmission - Multiple triggers - HDFC Securities

Maintain ADD on BSE - Fighting back, cash support - HDFC Securities

Colgate Palmolive Q4FY20 Result First Cut - Miss on all fronts - HDFC Securities

Maintain ADD on L&T Infotech - Q4FY20 Results Review - HDFC Securities

Maintain Reduce on Dr. Reddy's Labs - Valuations leave little room for disappointment - HDFC Securities

Maintain BUY on UltraTech Cement - Robust margin and leverage performance - HDFC Securities

Maintain BUY on CDSL - Robust performance continues - HDFC Securities

Downgrade to REDUCE on Jubilant FoodWorks - Good franchise, a pause before run - HDFC Securities

ADD on Bajaj Auto - Resilient margins - HDFC Securities

RIL Right's Issue - Mr. Jyoti Roy, DVP Equity Strategist, Angel Broking Ltd

First Cut Analysis: BUY on UltraTech - Healthy results despite Covid impact - HDFC Securities

BUY on Escorts - Strengthening the core - HDFC Securities

Maintain ADD on Crompton Consumer - Q4FY20 Results Review - HDFC Securities

Maintain ADD on Zensar Technologies - Elusive quest for growth - HDFC Securities

Retain BUY on Nippon Life India Asset Management - Strong core despite market share loss! - HDFC Securities

Maintain ADD on L&T Technology Services - Enduring the ebbs and flows - HDFC Securities

Maintain Buy on Cipla - Positive outlook reaffirmed - HDFC Securities

Maintain BUY on Mahindra & Mahindra Financial Services - Pain inevitable, valuations attractive - HDFC Securities

Maintain SELL on ABB India - Long road to recovery - HDFC Securities

Maintain ADD on Mphasis - Positives outweigh the risks - HDFC Securities

Maintain REDUCE on Siemens - Headwinds remain - HDFC Securities







Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019