JK Lakshmi Cement Ltd (Q2 FY14)

India Infoline News Service | Mumbai |

OPM contracts 10ppts yoy, in-line with our estimate; RM, higher freight and other overhead costs drag margins

CMP Rs68, Target Rs90, Upside 32%
 
  • JK Lakshmi Cement (JKLCE) Q2 top line de-grows by ~8% yoy at 4.5bn, above our estimate of Rs3.9bn; volumes jumped ~7%yoy (against our expectation of flat revenue growth) but average realization dropped ~15% yoy


  • OPM contracts 10ppts yoy, in-line with our estimate; RM, higher freight and other overhead costs drag margins


  • PAT at Rs103mn (against expectation of Rs22mn), down 80% yoy


  • We expect realizations to improve for JKLCE as demand for cement is likely to pick-up ahead of election in Delhi and Rajasthan, followed by a general election. We expect H2 FY14 to be better for JKLCE in near term


  • We recommend BUY with 9-12 months target price of Rs90. Valuations remain compelling despite concerns around economic slowdown impacting cement demand 

Result table

(Rs m)
Q2 FY14
Q2 FY13
bps yoy
Q1 FY14
bps qoq
Net sales
4,489
4,914
(8.7)
4,570
(1.8)
Material costs
1,157
937
23.5
1,014
14.2
Personnel costs
300
291
3.0
300
0.1
Power and fuel costs
1,001
1,102
(9.1)
1,034
(3.1)
Freight cost
1,000
953
5.0
1,025
(2.4)
Other overheads
468
503
(7.0)
495
(5.5)
Operating profit
563
1,128
(50.1)
704
(20.0)
OPM (%)
12.5
23.0
(1043 bps)
15.4
(286 bps)
Depreciation
(340)
(325)
4.6
(355)
(4.4)
Interest
(192)
(223)
(14.0)
(200)
(4.0)
Other income
86
155
(44.4)
29
198.3
PBT
117
735
(84.1)
178
(34.0)
Tax
(14)
(226)
(93.8)
(21)
(31.9)
Effective tax rate (%)
12.0
30.8
 
11.6
 
Adjusted PAT
103
509
(79.7)
157
(34.3)
Source: Company, India Infoline Research
 
Cost analysis
BSE 425.50 13.75 (3.34%)
NSE 426.55 15 (3.64%)

***Note: This is a NSE Chart

 

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