Motilal Oswal’s research report on J K Lakshmi Cement
Volumes increased 9% YoY (+8% QoQ) to 2.31mt (our estimate: 2.13mt). Realizations of INR4,056/t (+2% YoY, +1% QoQ) were in line with our estimate. Revenue grew 12% YoY to INR9.35b (our estimate: INR8.6b). Margins impacted by cost push: Cost/t rose 3% YoY (+2% QoQ) to INR3,630 (our estimate: INR3,568) due to higher RM cost/t (due to clinker purchase) and higher other expenses/t. Thus, EBITDA/ton of INR426 (-5% YoY, -1% QoQ) was lower than our estimate of INR485/t. EBITDA increased 4% YoY to INR983m (our estimate: INR1.03b), with the margin at 10.5% (-0.76pp YoY, -0.25pp QoQ). Tax rate stood at 25.4% v/s 32.5% in the year-ago period. PAT, thus, grew 72% YoY to INR148m (our estimate of a loss of INR171m).
We lower our FY19 EBITDA estimate by 8% due to higher cost assumption, which leads to an 18% decline in PAT for the year. Our EBITDA estimates for FY20/21 remain largely unchanged, with PAT for FY21 increasing by 6% due to lower depreciation and higher other income. We value JKLC at 8x FY21E EBITDA and arrive at a TP of INR386. Maintain Buy.
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First Published on Feb 13, 2019 03:53 pm