JK Lakshmi Cement has the recipe for revival, but execution is key
₹50-75 per tonne going ahead. The company is simplifying its corporate structure by consolidating subsidiaries. This is expected to boost cash flow and drive efficiencies in manufacturing, distribution, and logistics in the medium term.
The next leg of growth can come from expansions in the east and northeast. It aims to raise the grinding capacity to 30 million tonne per annum (mtpa) from 16.4 mtpa currently. The fight for market share gains has made timely capacity additions a crucial trigger for many cement stocks.
JK Lakshmi’s capacity expansion may keep its debt elevated. The accelerated capital expenditure (capex) plan could push net debt to ₹3,000 crore in the medium-term from ₹1,640 crore as of June-end, estimates Motilal Oswal Financial Services. “However, its net debt-to-Ebitda ratio is likely to be comfortable at <2.0x by FY27," said the brokerage.
In Q1FY25, JK Lakshmi’s consolidated capex was ₹150 crore with an expected spending of ₹1,500-1,600 crore in the remainder of FY25. Also Read: This indicator shows why cement companies have a rough road ahead Nirmal Bang Institutional Equities expects JK Lakshmi Cement to report revenue, Ebitda and profit after tax CAGR (compound annual growth rate) of 10%, 17% and 23% respectively over FY24-FY26E. The brokerage has valued JK Lakshmi stock at nine times its June 2026 estimated EV/Ebitda with a revised target price of ₹912, underpinned by strategic positioning in the key north, west and east markets.
JK Lakshmi’s shares now trade at ₹785 apiece. All said, execution in capex and ramping up new capacities could be challenging due to increased competitive intensity. The pace of revival in the stock’s performance hinges on how that pans out.
Read more on livemint.com
