JK Lakshmi Cement analysis: Cement giant JK Lakshmi Cement is set for a robust expansion plan, aiming to double its cement capacity to 30 million tonnes by fiscal year 2030. 

The move follows a strong performance in the December quarter (Q3FY24), where the company's operating metrics exceeded street expectations, analysts noted.

In the third quarter, the cement company reported consolidated  earnings before interest, taxes, depreciation, and amortisation (EBITDA) of Rs 300 crore, marking a 63 per cent year-on-year (YoY) increase and surpassing estimates by 18 per cent. 

The New Delhi-based company achieved an impressive EBITDA per tonne of Rs 1,021, up 52 per cent from the previous year, and a notable operating profit margin of around 18 per cent.

With a vision to exceed its capacity target, JK Lakshmi Cement plans to invest approximately Rs 4,000 crore over the next 2-3 years. 

The expansion strategy includes augmenting clinker capacity at its integrated Cement Plant in Durg, Chhattisgarh, and establishing new Cement Grinding Units across various locations.

Analysts at Motilal Oswal and Choice Broking remain bullish on JK Lakshmi Cement's prospects. 

Motilal Oswal raised EBITDA estimates for financial year 2024 (FY24) and financial year 2025-2-26 (FY25-26) by 6 per cent and 2-3 per cent, respectively. Hence, analysts reiterated ‘buy’ rating on the stock with a target price (TP) of Rs 1,030.

“The outlook for the cement Sector appears highly positive in the coming year due to the government's emphasis on infrastructure development and increased budgetary allocation towards this sector. The company's management has maintained its guidance of achieving double-digit volume growth for FY24 and has anticipated to be in the top 5 companies in terms of EBITDA/tonne,” brokerage firm Choice Broking highlighted in a note. Considering these factors, Choice Broking analysts recommended a ‘buy’ rating on the stock, with target price of Rs 1,030 per share.

JK Lakshmi Cement’s strong financial performance in Q3FY24, coupled with its ambitious expansion plans, underscores its determination to capitalise on the promising outlook for the cement sector, driven by increased infrastructure spending and government initiatives, analysts highlighted.

As of 9:54 am, shares of the cement company were trading 3.18 per cent higher at Rs 916 per share