For Q2FY23, JK Lakshmi Cement’s net sales rose 16 per cent year-on-year (YoY) to Rs 1,303 crore. Profit declined 22.7 per cent YoY to Rs 59.62 crore on higher input costs. The company said its profitability remained under pressure largely due to an unabated rise in global fuel cost. The company has been able to mitigate part of it by improving operational efficiencies, increasing the volume, optimising product mix and enhancing the premium product sales, it said.
However, analysts said the results were better-than-estimated, mainly driven by better-than-expected realisations that were up around 17 per cent YoY to Rs 5,651/tonne (up 1.5 per cent QoQ).
Within the infra space, ICICI Securities expect cement stocks to witness catch up activity. Among cement stocks, the brokerage firm said it remains constructive on JK Lakshmi Cement.
Being predominantly North (8.2 MT) and Central (3.5 MT) player, the company has got the structural advantage of a balanced environment in these two high growing regions. Further, self-sufficiency in power, through captive power plant (CPP) of 54 MW, waste heat recovery (WHR) plant of 33 MW and solar power plant of 6 MW has helped the company to reduce reliance on costly grid power. In the eastern region, the company has a 7 MW WHR plant and has recently commissioned CPP of 20 MW to become self-sufficient. To reduce the freight cost, it has added 0.8 MT grinding unit in FY20 in Odisha. Proximity to market and self-sufficiency in power would continue to ensure improved cost efficiency, going forward, the brokerage firm said.
The recent commissioning of 10 MW WHRS (total capacity now 33 MW) along with increased share of alternate fuels (14 per cent) to help contain the cost pressure to some extent in the wake of higher fuel prices. B/s strength to remain healthy despite ongoing capex of around Rs 1,650 crore for its subsidiary unit Udaipur Cement Works Limited (UCWL), it added. The stock however, trading above brokerage firm target price of Rs 640 per share.
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