JK Lakshmi Cement (Buying Range: |127-|120)
• JK Lakshmi Cement is a North India based cement company
having an integrated cement plant with the capacity of 4.2 MTPA
at Sirohi, Rajasthan and 0.55 MTPA each at Kalol (Gujarat) and
Jhajjar (Haryana). JKLC is expanding its cement capacity by
2.7MTPA at Durg, Chhattisgarh over next one or two years
• On account of strong demand growth expectations in northern,
central and western regions, we expect cement volumes to grow
at ~7% CAGR during FY12-14E to 5.6 MT in FY14E from 4.9 MT in
FY12. Also, improvement in utilisation rates, going forward,
would help in sustainable pricing. We expect realisation to grow
~16% YoY in FY13E and ~6% in FY14E. Margins are expected to
improve in FY13E/14E, led by improvement in realisations and
operating leverage benefits
• We remain positive on the stock on account of capacity expansion
led volume growth, improvement in margins and return ratios and
cheap valuations. It is trading at $54/tonne at FY14E capacity of
8.1 MT, which is ~55% discount to the current replacement cost
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