Company Background :
J.K. Cement Limited is an India-based holding company. The Company is engaged in manufacturing cement and cement products. Its product portfolio includes grey cement, white cement and wall putty. It offers a range of grey cement, which include Portland Pozzolana cement (PPC), ordinary Portland cement (OPC) and Portland slag cement. Its white cement portfolio includes J.K. White Cement, J.K. Wall Putty, J.K. Waterproof and J.K. Primaxx.
White cement is used for decorative and architectural applications. J.K. Wall Putty is a white cement based fine powder, which provides a base for concrete/cement plastered walls and ceilings. J.K. Water Proof is a water repellant powder, which prevents passage of water through pores and capillaries of the concrete. JK PRIMAXX is a product used for interiors and exteriors. Its grey cement plants are located in Rajasthan and Karnataka. Its white cement and white cement-based wall putty plants are located in Rajasthan and Madhya Pradesh. Source - Investing.com
Financial Performance :
JK Cement (JKCEM), with total grey cement capacity of 10.8mtpa, would benefit from expected volume growth in North India. JKCEM sells 64% of volumes in the northern and western regions. We expect JKCEM to register strong revenue CAGR of 12.3% over FY18E-20E led by improving utilization level in North India (government spending on roads and affordable housing) and strong performance of white cement (pricing 2.5x grey cement).
JKCEM will benefit from cost rationalization through economies of scale, commissioning of railway siding and grid connection at the UAE plant. Cost rationalization and increasing share of white cement in total revenue (33%) will aid margin expansion; EBITDA margin is estimated at 20.8% in FY20E (410bps expansion over FY18E-20E). We see PAT CAGR of 43% over FY18E-20E. - Source - 5paise.com
Stock Performance:
During the last 1 year the scrip has given following returns
The scrip has touched a low of 251 and a high of 398.
1 year - minus 14.12%
6 months - minus 20.63%
3 months - minus 13.32%
1 month - 0.48%
1 week - minus 0.15%
Recommendation :
Buy and add to your long term portfolio. In the short term 840 will be a good resistance point. The scrip may correct in the short term, and Rs.700 is the support level in case of a correction. Hold long ter fo ra Target price of 865 in next 12 months and 1025 for 18 months holding in view of the revenue and profit visibility.
The company has brand and memory recall and is a monopoly in white cement and is uniquely positioned to get best sales of the products.
Raghav
Equty Research Analyst
Smart Investor
Equity Research
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