Top Conviction Ideas : Buy JK Lakshmi Cement Ltd for Target Rs. 1,050 - Axis Securities Ltd
* The setting up of a grinding unit in Surat of 1.4 mtpa at a capital cost of Rs 220 Cr, which is to be funded out of a mix of internal accruals and debt, 1 st phase is expected to commence in Q2FY26.The company is also setting up a grinding unit with a capacity of 4.6 mtpa and a Clinker unit of 2.3 mtpa. These facilities are expected to commence in phases over FY26- FY28, thereby boosting its market share, volume and revenue growth. We project a volume and revenue growth CAGR of 8%/11% over FY25-27E
* JKLC reported an 11% YoY increase in revenue to Rs 1,741 Cr. This was driven by a 10% YoY growth in sales volume, outperforming the industry's average growth.
* JKLC expects cost savings of Rs 100-120 per tonne. We project EBITDA/tonne growth at a 7% CAGR over FY24-27E, reaching Rs 1,000/tonne, supported by better realisations, higher volumes, and cost-saving measures.
* Given the government's emphasis on infrastructure development and increased budgetary allocation for housing and road projects, the outlook for the cement sector remains positive for the upcoming year.
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