JKCE posted revenue growth of 7% YoY (-15% QoQ) to INR 11.2bn, led by 9% YoY volume growth in grey cement. Drop in realization in grey cement, limited the growth of JKCEâ€™s revenue. Grey cement realisation for 1QFY19 stood at INR 3,799 down by 4.7% YoY (-2.23% QoQ). Company's white cement (including wall putty) segment volume grew by 7.7% YoY to 0.28 mn ton. White cement realization was up by 7.2% YoY to INR 11,689. Power & fuel costs increased by 37% YoY to INR 2.5bn (Power cost/ton increased by 26% YoY to INR 1,062 due to surge in pet coke prices). Freight costs during 1QFY19 grew by 13.5% YoY to INR 2.6bn , freight cost/ton grew by 4% YoY to INR 1,139.
JKCE stock has corrected by ~23% in the last quarter. Increased capacity coupled with higher capacity utilization (due to expected improvement in Industryâ€™s demand-supply dynamics mainly led by increase in infrastructure spending and affordable housing under Pradhan Mantri Awas Yojna) augurs well for JKCE going ahead. At CMP, the stock trades at EV/EBITDA 10.2X and 8.4X FY19E & 20E respectively. We maintain BUY rating on the stock, with a revised target price of INR 901 assigning a multiple of 9X on EV/EBITDA of FY20E.
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