JK Lakshmi Cement surges 7%, nears record high on healthy Q4 results

Shares of JK Lakshmi Cement surged 7 per cent and hit a fresh 52-week high of Rs 499.70 on the BSE in intra-day trade on Friday after the company reported 37 per cent year-on-year (YoY) jump in March quarter (Q4FY21) standalone net profit at Rs 138.27 crore, on the back of healthy operational performance. It had a profit of Rs 101.21 crore in Q4FY20. The stock was trading close to its record high level of Rs 535, touched on May 17, 2017.

The company’s revenue from operations grew 24.6 per cent YoY at Rs 1,322 crore. Ebitda (earnings before interest, taxes, depreciation, and amortisation) margin improved 130 basis points (bps) to 20.3 per cent in Q4FY21 from 19 per cent in Q4FY20.

Despite hike in the prices of inputs like petcoke, diesel, fly ash, gypsum, the company said it has improved its profitability on account of substantial higher volumes, higher realisations, improved efficiency, improved product mix etc.

“At 99 per cent capacity utilisation, the company achieved its optimum capacity utilization during the quarter leading to healthy margin expansion and profitability growth. To address the capacity constrain issue, the company has already announced further expansion of 2.5MT capacity at its subsidiary unit. This would help it to continue its growth momentum”, ICICI Securities said in a note.

“Volumes grew 18 per cent YoY to 2.90mt (in line with estimate) and EBITDA/t was 36 per cent above estimate at Rs 922 (+30 per cent QoQ, +13 per cent YoY). While realization was 4 per cent above estimate at Rs 4,552/t (+3 per cent QoQ, +6 per cent YoY), per ton cost was 2 per cent below estimate at Rs 3,630/t (+4 per cent YoY, -2 per cent QoQ) – on account of lower-than-expected power and fuel cost at Rs 782/t (-4 per cent YoY),” Motilal Oswal Securities said in results update.

The brokerage firm assigned JK Lakshmi Cement a 'BUY' rating on an attractive valuation ($56/t of EV/capacity) and strong exposure to the preferred North India market, which should drive earnings growth. It is also currently in the process of adding a 2.5mtpa brownfield capacity in North India through its subsidiary Udaipur Cement Works.

At 10:00 am, the stock was trading 5 per cent higher at Rs 491 on the BSE, against 1.1 per cent gain in the S&P BSE Sensex. A combined 1.9 million equity shares have changed hands on the counter on the NSE and BSE, so far.