Domestic brokerage firm Motilal Oswal has reaffirmed its “buy” recommendation for JK Lakshmi Cement as the company embarks on expanding its grinding capacity and aims to enhance its market footprint. With a target price set at Rs 1,030 per share, reflecting a 15 percent potential upside from the current market value, the brokerage remains optimistic about the company’s growth prospects.
In the opening hour of trading, JK Lakshmi Cement shares witnessed a 2 percent increase. However, the gains were slightly trimmed, with the stock quoting at Rs 896.55 at 10:15 am, indicating a 0.5 percent rise from the previous session.
JK Lakshmi Cement is strategizing to elevate its grinding capacity to approximately 24 million tonnes per annum (mtpa) to 30 mtpa by FY27/FY30, a significant escalation from the existing 14 mtpa.
After reporting its December quarter earnings, JK Lakshmi Cement unveiled its upcoming expansion phase in the eastern and central regions, adopting a combination of brownfield and greenfield modes.
Furthermore, the company disclosed plans for an acquisition in the north-eastern region to broaden its market reach, a move that has bolstered Motilal Oswal’s bullish stance on the cement player.
JK Lakshmi Cement is venturing into the Northeast region by establishing clinker and grinding capacity of 1mtpa/1.5mtpa in Assam. The company is acquiring an 85 percent stake in Agrani Cement, which, along with its subsidiaries, holds mining rights in Assam, boasting limestone reserves of approximately 335 million tonnes. The project is estimated to cost Rs 1,000 crore and is expected to be completed within the next two years.
Motilal Oswal highlighted that the company’s strategic focus on geo-mix optimization, increasing share of trade sales and premium products, enhanced brand visibility, and sustainable growth contributed to achieving an EBITDA per tonne of Rs 1,021 in the third quarter of the current fiscal year.
Additionally, the implementation of digitization and automation measures has enabled the firm to enhance the yield value per tonne.
Motilal Oswal forecasts that the EBITDA will achieve a Compound Annual Growth Rate (CAGR) of approximately 20 percent over FY23-26, driven by a 9 percent volume growth and an 11 percent increase in EBITDA per tonne.
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