Motilal Oswal - JK Lakshmi Cement (JKLAKSHMI) MOSL: J K LAKSHMI CEMENT (Buy)-EBITDA disappointment led by cost push

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Motilal Oswal

MOSL: J K LAKSHMI CEMENT (Buy)-EBITDA disappointment led by cost push

â€‹J K Lakshmi Cement: EBITDA disappointment led by cost push

(JKLC IN, Mkt Cap USD0.8b, CMP INR449, TP INR519, 15% Upside, Buy)

Strong realizations in core markets: JKLC's volumes rose 8% YoY (flat QoQ) to 2.29mt (in-line) due to ramp-up in its east operations, where volumes rose 24% YoY. Realizations grew 7% YoY (+12% QoQ) to INR3,943 (est. of INR3,831) due to strong pricing in its focus markets of Gujarat. EBITDA rose 2% YoY (+68% QoQ) to INR1.2b (est. of INR1.29b; margin: 13.4%, -1.7pp YoY, +4.5pp QoQ), translating into EBITDA/ton of INR527 (-INR28/t YoY, +INR214/t QoQ; est. of INR562/t). Revenue grew 16% YoY (+11% QoQ) to INR9b (est. of INR8.8b). Net profit of INR283m missed estimate of INR471m due to lower EBITDA and a higher tax rate of 24%.
Cost push dents profitability: Unitary cost per tonne rose 10% YoY (+6% QoQ) due to a sharp increase of 35% YoY/14% QoQ in power & fuel cost (led by higher underlying price of petcoke) and higher proportion of sales from the eastern unit, which has inferior cost structure v/s north operations.
Management commentary: JKLC's volumes rose 8% YoY to 2.28mt on ramp-at its new eastern unit. EBITDA/t differential between north and east is ~INR300/t. Utilization for east units was at 92% and for north units at 74% in 1Q. Petcoke usage is ~85% in north and 60% in east.

07/08/2017 8 EN

Underlying

JK Lakshmi Cement

JK Lakshmi Cement is engaged in the manufacture of paper, cement, magnetic tape, polyester staple fiber and polyester filament yarn. Through its subsidiaries, Co. is also engaged in the manufacture of iron and steel and the provision of financial and investment services. Co. exports paper to Malaysia, Singapore, Sri Lanka, Bangladesh, Africa and the Middle East. Co. manufactures JK Laser, copier paper for laser printer, Chancellor Bond, JK Compac for computer stationery, Grade 43 cement and paper for packaging and books. Co. also exports audio tapes and is a supplier to recording companies. In addition, Co. exports fibers to Germany, Belgium, Egypt, Bangladesh and Russia.

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INE786A01032 National Stock Exchange of India India

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Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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MOSL: J K LAKSHMI CEMENT (Buy)-EBITDA disappointment led by cost push

Jk Lakshmi Cement: 1 director

MOSL: J K LAKSHMI CEMENT (Buy)-Cost pressure to continue; eyeing on volume growth

With a more favourable environment, J K LAKSHMI CEMENT improves to Positive

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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