Sunday, February 5, 2023

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Shares of THIS company soar 28% in November; read whether you should invest

Share Market: In Wednesday’s intraday session, shares of JK Lakshmi Cement reached a record high of Rs 706.55, up 3% on the BSE and up 6% over the previous three days due to a positive business outlook. The stock price of the cement company has increased by 28% so far in November, compared to a nearly 5% increase in the S&P BSE Sensex. The stock rose over Rs. 683.85, or the 52-week high, attained on September 20, 2022.

JK Lakshmi Cement’s net sales for Q2FY23 increased 16% year over year (YoY) to Rs 1,303 crore. Profit fell 22.7% YoY to Rs 59.62 crore as a result of rising input costs. The corporation said that a persistent increase in the price of fuel worldwide was a major factor in the strain on its profits. According to the corporation, it has been partially mitigated by increasing operational effectiveness, volume, product mix optimization, and premium product sales.

Analysts claimed that the results were better than expected, mostly due to better-than-anticipated realisations that increased by almost 17% YoY to Rs 5,651/tonne (up 1.5 per cent QoQ).

Cement equities are expected to experience catch-up activity in the infra industry, according to ICICI Securities. The brokerage business stated that it continues to be bullish on JK Lakshmi Cement, one of the cement companies.

Due to its dominance in the North (8.2 MT) and Central (3.5 MT), the company benefits structurally from a stable environment in these two rapidly expanding regions. The company has also been able to lessen its dependency on pricey grid power thanks to its self-sufficient 54 MW captive power plant (CPP), 33 MW waste heat recovery (WHR) facility, and 6 MW solar power plant.

The company has a 7 MW WHR plant in the eastern region and only just started up a 20 MW CPP to achieve self-sufficiency. In FY20, it added a 0.8 MT grinding plant in Odisha to lower freight costs. According to the brokerage firm, proximity to the market and self-sufficiency in power would continue to guarantee increased cost-effectiveness in the future.

Following higher fuel costs, the recent commissioning of 10 MW WHRS (total capacity currently 33 MW) and increased share of alternative fuels (14%) would help to some extent restrain cost pressure. Despite continuing investment of about Rs 1,650 crore for its subsidiary unit Udaipur Cement Works Limited (UCWL), B/s strength will continue to be strong, it added. The stock is currently trading above the target price set by the brokerage firm of Rs. 640 per share.

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