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Broker’s call: JK Lakshmi Cement (Buy)

Target: ₹1,000

CMP: ₹857.10

The company’s ongoing capacity expansion at its subsidiary UCWL (Udaipur Cement Works Ltd) of a 2.5 mtpa grinding unit is progressing well and is expected to commercialise in Q1-FY25. The clinker unit (1.5 mtpa) is already operational and getting stabilised. Clinker produced at UCWL will be used by JKLC for grinding

The company also announced the setting up of a grinding unit in Surat of 1.35 mtpa at a capital cost of ₹220 crore, which is to be funded out of a mix of internal accrual and debt. Out of 1.35 mtpa, 0.70 mtpa will become operational by Q3-FY25, and the balance 0.65 mtpa by Q1-FY26. The railway siding work at Durg Plant is going on as per plan.

The company is working on many levers, such as optimising geo-mix, higher production and sale of blended cement, an increasing proportion of trade sales, premium and value-added products, logistic efficiency, and the use of more renewable power, to increase its EBITDA/tonne to a four-digit number in the next 12 to 18 months.

Cement demand is expected to remain robust on the back of higher government thrust on developing infrastructure, better real estate demand, private Capex, and higher individual home builders demand.

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