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Reliance Securities
JK Cement (Buy)
CMP: ₹699.65
Target: ₹1,000
JK Cement Ltd Limited is an India-based holding company. The company is engaged in manufacturing cement and cement products. Its product portfolio includes grey cement, white cement and wall putty. We have interacted with the senior management of JK Cement to understand its current status of business and general financial synergy after QIP, which was mainly done to meet funding requirement (about ₹2,000 crore) for its ongoing capacity programme.
Post completion of QIP issue, JK Cement is set to witness a healthy traction ahead mainly led by ease of concern over possible increase in leverage, decent progress on capacity expansion programme, healthy earnings in subsequent quarters and likely improvement in the UAE operations.
We believe that QIP proceed of ₹510 crore provides necessary capital to JK Cement, which will prevent from further leveraging and thereby will aid the company to save in incremental interest cost. Maintaining our positive view on the stock and upgrading our earnings estimates for forward years, we reiterate our ‘buy’ rating on the stock with a revised target price of ₹1,000 (earlier ₹820).
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