Domestic brokerage firm Motilal Oswal has reiterated its “buy” recommendation for JK Lakshmi Cement as the company continues to expand its grinding capacity and aims to widen its market presence. With a target price of Rs 1,030 per share, representing a potential upside of 15% from the current market price, the brokerage remains optimistic about the company’s prospects.
In the opening hour of trading, the share price rose by 2%, but later moderated its gains to trade at Rs 896.55 at 10:15 am, up 0.5% from the previous session.
JK Lakshmi Cement is strategically planning to increase its grinding capacity to approximately 24 mtpa/30 mtpa (million tonnes per annum) by FY27/FY30, up from the existing 14 mtpa.
Following its strong performance in the December quarter, JK Lakshmi Cement unveiled its next phase of expansion in the east and central regions through a combination of brownfield and greenfield projects.
Additionally, the company announced an acquisition in the northeast region to enhance its market presence. It is venturing into the Northeast by establishing 1mtpa/1.5mtpa clinker/grinding capacity in Assam and acquiring an 85% stake in Agrani Cement. This move will provide access to significant limestone reserves of around 335 million tonnes in Assam. The project, with an estimated cost of Rs 1,000 crore, is expected to be completed within the next two years.
Motilal Oswal highlighted JK Lakshmi Cement’s focus on geo-mix optimization, increasing trade sales and premium products, enhanced brand visibility, and sustainable growth as key factors driving its positive outlook. The company’s EBITDA per tonne reached Rs 1,021 in the third quarter of the current fiscal year, supported by digitization and automation initiatives that boosted yield value per tonne.
The brokerage firm estimates an EBITDA CAGR of approximately 20% over FY23-26, propelled by a 9% volume growth and an 11% increase in EBITDA per tonne.
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