ICICI Securities Research Report on JK . Cement
JK Cement (JKCE)’s performance in Q1FY24 remained good, being one of the few cement companies to record a QoQ margin improvement of around 170 basis points (EBITDA 15% higher than estimates). We see the possibility of further margin improvement through the short-term benefits of a) new Panna unit incentives (in Madhya Pradesh); b) and savings from the recently commissioned 22 MW WHRS plant at Panna and the upcoming 16 MW at Muddapur (Karnataka). In the medium term, margins are likely to increase as a result of c) reduction in clinker factor (following intensification of further fractional crushing units in Ujjain (Madhya Pradesh) and Prayagraj (Uttar Pradesh) and d) efforts to achieve acquired by JKCE to further reduce fixed costs. Overall, JKCE remains a compelling investment story.
Opinion
Keep BUY with TP unchanged at 3,856 INR.
