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JK Lakshmi Cements (JKLC) reported a 14.1% yoy improvement in its bottom line
during 2QFY2012, which was below our estimate due to lower-than-estimated
realization. Although, realization grew by 11.7% on a yoy basis, sequentially it
was down by 10.6%. EBITDA per tonne stood at `365, up 24.6% yoy (down
47.8% qoq). We maintain our Buy view on the stock.
OPM at 11.6% up 123bp yoy: During 2QFY2012, JKLC registered top-line
growth of 33.2% yoy to `354cr. The company’s dispatches rose by healthy
19.3% yoy to 1.13mn tonnes, while realization improved by 11.7% yoy to
`3,142/tonne. Operating margin improved by 123bp yoy to 11.6%, aided by
better realization, although the company faced margin pressures due to
increased freight and other costs. JKLC’s operating profit rose by 48.9% yoy
during the quarter. However, bottom line rose by lower 14.1% yoy to `6.5cr.
Lower growth in the bottom line was on account of higher depreciation (up
37.7% yoy), interest (up 79.6% yoy) and tax expenses (`1.4cr in 2QFY2012
vs. negative tax of 1.7cr in 2QFY2011).
Outlook and valuation: We expect JKLC to post a decent 12.9% CAGR in its top
line over FY2011-13E, aided by a 6.5% CAGR in dispatches over the period.
At the CMP, the stock is trading cheaply at EV/EBITDA of 2.6x and EV/tonne of
US$32 based on FY2013E. We have valued the stock at EV/EBITDA of 3x on
FY2013E to arrive at a target price of `52. We maintain our Buy recommendation
on the stock primarily due to its cheap valuations.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
JK Lakshmi Cements (JKLC) reported a 14.1% yoy improvement in its bottom line
during 2QFY2012, which was below our estimate due to lower-than-estimated
realization. Although, realization grew by 11.7% on a yoy basis, sequentially it
was down by 10.6%. EBITDA per tonne stood at `365, up 24.6% yoy (down
47.8% qoq). We maintain our Buy view on the stock.
OPM at 11.6% up 123bp yoy: During 2QFY2012, JKLC registered top-line
growth of 33.2% yoy to `354cr. The company’s dispatches rose by healthy
19.3% yoy to 1.13mn tonnes, while realization improved by 11.7% yoy to
`3,142/tonne. Operating margin improved by 123bp yoy to 11.6%, aided by
better realization, although the company faced margin pressures due to
increased freight and other costs. JKLC’s operating profit rose by 48.9% yoy
during the quarter. However, bottom line rose by lower 14.1% yoy to `6.5cr.
Lower growth in the bottom line was on account of higher depreciation (up
37.7% yoy), interest (up 79.6% yoy) and tax expenses (`1.4cr in 2QFY2012
vs. negative tax of 1.7cr in 2QFY2011).
Outlook and valuation: We expect JKLC to post a decent 12.9% CAGR in its top
line over FY2011-13E, aided by a 6.5% CAGR in dispatches over the period.
At the CMP, the stock is trading cheaply at EV/EBITDA of 2.6x and EV/tonne of
US$32 based on FY2013E. We have valued the stock at EV/EBITDA of 3x on
FY2013E to arrive at a target price of `52. We maintain our Buy recommendation
on the stock primarily due to its cheap valuations.
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