JK Cement share price rose by 7.2 percent intraday on June 19 as brokerage houses remained bullish on the stock, expecting 8-17 percent rally after Q4 earnings beat estimates.
In the one last year, JK cement stock has rallied 34 percent and 50 percent from its March lows. The price was trading in between Rs 1,308, and Rs 61.75 or by 4.95 percent, on the BSE at 1309 hours.
JK Cement’s Q4FY20 results significantly crossed all of its estimates, it was higher than expected real, JM Financial said. Revenue recorded a marginal decline of 1 percent YoY due to the COVID-19 induced lockdown.
In general, volumes declined by 7 percent YoY. JM Financial further said “realizations beat was primarily on the reversal of provisions created for payment of incentives to channel partners, amounting to Rs 20-25 crore,”
JM Financial valued JK cement at 9x FY22 EBITDA to arrive at a revised target price of Rs 1,350.
Blended EBITDA per tonne at Rs 1,228 per tonne reported an improvement due to higher realizations.
The brokerage also said that the change in the product mix (higher grey cement proportion) and decline in petcoke/coal prices balance out the impact of negative operating leverage.
Net debt of Rs 1,600 crore is expected to peak around Rs 2,500-2,600 crore as the company is spending Rs 700 crore towards its existing projects and Rs 150-250 crore towards maintaining capex, infusion in Fujairah and projects in the pipeline, the brokerage added.
Looking beyond in the Financial Year 2021, JM Financial hopes the return of favorable ratios for JK Cement.
HDFC Securities also maintained its buy rating, with a target of Rs 1,425, and is looking at the company’s grey cement capacity and it’s white/putty continues to provide profits to the firm.
Also, during Quarter 4 of the Financial Year 2020, the grey segment’s profit continued to hike.