JK Lakshmi Cement shares zoom 6.7% as net profit grows 55% in Q2

JK Lakshmi Cement, a part of JK Organisation, witnessed a notable 6.77% surge in its stock price, hitting a four-month high of ₹719.90 per share during Friday's early trading session, propelled by its impressive Q2FY24 performance. At 10:00 AM, the stock was trading with a gain of 5.17% at ₹709. 

The company released its Q2FY24 numbers post market hours on Thursday, with a 55% surge in its consolidated net profit at ₹96 crore. During the same period of last year, the company posted a net profit of ₹62 crore, and in the preceding June quarter (Q1FY24), the net profit came in at ₹80 crore.

Its revenue from operations during the September quarter surged to ₹1,575 crore from ₹1,374 crore in Q2 FY23, reflecting a notable 14.62% increase. The company's operating profit showed a 32% YoY improvement, amounting to ₹217 crore. 

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Further, the EBITDA margin expanded by almost 200 basis points, reaching 13.8%. Notably, the company's blended EBITDA per tonne showed a 17% YoY increase and a 23% QoQ increase, reaching ₹755 per tonne in Q2FY24. 

Commenting on the results of the company, Vinita Singhania, Vice Chairman & Managing Director of the firm, said, "The profitability of the company improved on account of higher volume, a better product and sales mix, and a reduction in fuel cost."

The Board has approved the setting up of an additional cement grinding unit of 13.50 lakh tonnes per year at its existing Surat grinding unit.

"The company's subsidiary, Udaipur Cement Works Ltd. (UCWL), successfully commissioned its second Clinker line of 1.50 million tonnes per annum in October 2023, whereby its Clinker capacity has doubled to 3 million tonnes per annum. Work on the 2.50 million tonnes per annum of cement Mill & packing Plant is in full swing as per schedule," the company said in its earnings report. 

Considering the government's focus on infrastructure development and higher budgetary allocation towards infrastructure development and various other initiatives for housing and road development, the outlook for the cement sector is quite positive in the coming year, according to the company. 

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Following the company's Q2FY24 performance, brokerage firm Antique Stock Broking maintained its 'buy' call on the stock and raised the target price to ₹820 apiece from an earlier target price of ₹780 apiece. This new target price reflects an upside of 15.65% from the stock's current trading price of ₹709.

"We expect an 8% consolidated volume CAGR during FY24–26E, while EBITDA/tonne should reach ₹920 by FY26E from ₹710 in FY23, led by lower fuel costs, better cost efficiencies, and higher realisation," said the brokerage.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.