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JK Cement Ltd. is a leading Indian manufacturer of grey and white cement, with a strong domestic and international presence. It offers grey cement, white cement, wall putty, and gypsum plaster. JK Cement operates across 19 Indian states and 32 countries, with a grey cement capacity of 24.34 MTPA and white cement capacity of 3.05 MTPA.

• In Q3FY25, the revenue remained flat at Rs 2,930cr, while the EBITDA declined by 21.3% YoY to Rs 492cr, with margins dropping to 16.8% from 21.3% in Q3FY24. The consolidated net profit fell by 33.2% YoY to Rs 190cr, impacted by higher employee and freight costs. The board approved a 60% stake acquisition of Saifco Cements Private Ltd. for Rs 174cr.

• Revenue/EBITDA/PAT are expected to grow at 6.5%/10%/14.2% CAGR (as per Bloomberg consensus) over FY24-26E as demand is expected to pick up given the recent acceleration in government infrastructure & housing projects, which will also support realisations.

• However, near-term challenges include competitive pricing pressures and increasing debt due to ongoing capital expenditures.

• As per Bloomberg consensus, the stock is currently trading at a 1 yr fwd. EV/EBITDA of 16.3x, which is at a premium compared to its 5 year average of 13.7.

Technical View

• The stock has breached its key support level, which is the rising trendline connecting the lows of November 2024 and January 2024, as well as its 21-DMA and 50-day moving average (50-DMA).

• A price momentum divergence on the weekly chart, coupled with a bearish candlestick pattern formed in the previous week, signals potential early signs of a trend reversal.

• The relative strength index (RSI) is gradually weakening, currently positioned on a downward slope near 42, indicating increasing selling pressure. Furthermore, a negative crossover on the MACD on the daily chart reinforces the bearish outlook.

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