IGI Logo

J.K. Cements consolidated Q4FY24 volumes came at INR5.2mnt, up 11.1% QoQ and 11.1% YoY, leading to INR31,058mn in revenues, up 5.8% QoQ and 11.8% YoY. For the full year FY24 consolidated volume came at INR19mnt, up 18.1% YoY. Company reported full year consolidated revenue at INR115.6bn, up 18.9% YoY. J.K. Cements Ltd had achieved 85% utilization for Q4FY24. EBITDA/t for the quarter came at INR1,073/t, down 19.3% QoQ but up 44.2% YoY. The YoY spike in EBITDA/t was mainly led by lower power and fuel cost. PAT for FY24 stood at INR7,899mn, up 89.7% YoY. EPS for the full year was INR102.3. During Q4FY24 premium products stood at 13% of trade sales.

* Expansion Plans on Track: JK Cement Ltd.'s management aims for a total Capex of INR19,000mn in FY25E and INR18,000mn for FY26E. The company is in the process of expanding a 2.0mnt grinding unit at Prayagraj, which is nearing completion and anticipated to be operational in the July-September quarter of FY25E. The board has endorsed a central India expansion initiative, augmenting the overall capacity to 6 MTPA. This entails expanding cement grinding capacity by 3 MTPA in Bihar and 1 MTPA each at Panna, Hamirpur, and Prayagraj. Additionally, the commencement of the 3.3 MTPA clinker line-2 and 1 MTPA cement capacity expansion project at Panna, MP, has occurred, with the project cost estimated at INR23,020mn and expected to be operational by Q2FY26E. The expansion to 6mtpa is projected to contribute to reaching the target of 30mnt by FY26E.

* Targeting total cost/t to reduce by 150-200/t by FY26E: During the quarter, the total cost/t amounted to INR4,877/t, showing a decrease of 0.8% on QoQ and 5.6% a YoY basis. Looking ahead, the company's management is focused on further reducing costs by approximately INR150-200/t by the end of FY26E. To achieve this reduction, the company is implementing several strategies. Firstly, efforts are being made to decrease freight expenses by around INR50/t. This will be accomplished by optimizing transportation routes to reduce lead distances, thereby cutting transportation costs. Moreover, significant cost reductions are anticipated through the implementation of green power and increased usage of AFR. In FY24, the company's green power mix stood at 51%. However, the company aims to significantly increase this figure to 75% by the end of FY30E. This transition to green power sources will not only contribute to cost savings but also align with environmental sustainability goals.

Outlook & Valuation: Management anticipates that cement demand will experience moderate growth of 6-7% in FY25E, primarily fuelled by the infrastructure and industrial/commercial segments, with housing expected to provide additional support following the elections. The industrial sector is poised to benefit from strong economic growth, leading to heightened demand for construction materials. Moreover, JK Cement Ltd. is actively pursuing several expansion initiatives to enhance its market share. The company is also committed to cost optimization through the implementation of WHRS projects. Furthermore, JK Cement's management is optimistic about achieving a 10% growth in FY25E. As per our FY26E estimates, we expect Revenue/EBITDA/PAT to grow at a CAGR of 14.7%/19.3%/14.9% respectively over FY24-FY26E. Our target EV/EBITDA multiple is 13.0x (modified) on FY26E EBITDA, hence we ascribe a target price of INR4,340, maintaining our rating to BUY.

For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131