Shares of JK Lakshmi Cement moved 6 per cent greater to Rs 662.25 on the BSE in Monday’s intra-day commerce resulting from heavy volumes in an in any other case weak market.
Prior to now two buying and selling days, the inventory of the cement maker has rallied 15 per cent regardless of the corporate’s weak earnings for the quarter ended September (Q2FY23).
JK Lakshmi Cement is buying and selling near its 52-week excessive degree of Rs 683.85, which it had touched on September 20, 2022, on hopes of margin enchancment going ahead. The common buying and selling volumes on the counter more-than-doubled, with a mixed round 1.5 million shares having modified palms on the NSE and BSE. Compared, the S&P BSE Sensex was down 0.08 per cent at 60,901 factors, at 02:06 pm.
For Q2FY23, JK Lakshmi Cement’s internet gross sales rose 16 per cent year-on-year (YoY) to Rs 1,303 crore. Revenue declined 22.7 per cent YoY to Rs 59.62 crore on greater enter prices.
The corporate mentioned its profitability remained beneath stress largely resulting from an unabated rise in international gas value. The corporate has been in a position to mitigate a part of it by enhancing operational efficiencies, rising the quantity, optimising product combine and enhancing the premium product gross sales, it mentioned.
Nonetheless, analysts mentioned the outcomes have been higher than estimated, primarily pushed by better-than- anticipated realisations that have been up round 17 per cent YoY to Rs 5,651/tonne (up 1.5 per cent QoQ).
This led to decrease margin erosion than anticipated earlier. Now, with the correction within the petcoke/worldwide coal costs, ICICI Securities expects the fee curve to maneuver downwards within the forthcoming quarter whereas higher realizations ought to assist the corporate to recoup misplaced margins.
In accordance with analysts at Anand Rathi Share and Inventory Brokers, JK Lakshmi’s sharper give attention to higher realisations aided income progress, however the high-cost surroundings curbed its working efficiency. The continuing UCW enlargement is on observe and anticipated to be full by FY24. Efforts like enhancing working effectivity by way of extra renewable vitality/different gas and rising the blended cement share/premium cement would assist, the brokerage agency mentioned.
“With a long-term goal of enhancing EBITDA/tonne to Rs 1000, the assorted efforts: greater renewable vitality share, different gas share and lowering the lead distance can be key contributors. We anticipate EBITDA to clock a 6 per cent CAGR over FY22-25,” analysts mentioned with a ‘purchase’ ranking on the inventory and a goal worth of Rs 828 per share.
