On Friday, Incred Research updated its outlook on JK Lakshmi Cement Ltd (JKLC:IN) shares, raising the price target to INR955.00 from the previous INR910.00. The firm retains an 'Add' rating on the stock.
The adjustment follows JK Lakshmi Cement's first-quarter fiscal year 2025 consolidated sales volume report, which showed figures remaining steady year-over-year at approximately 3.04 million tonnes, including clinker. This volume was slightly below Incred's estimate by about 2%.
The sales volume growth for JK Lakshmi Cement was impacted by the general elections in India and a scarcity of labor in its key markets. Despite these challenges, the company has set a growth target of at least 2% for the fiscal year 2025, which is above the industry average growth rate of 6-7%. This updated projection is a decline from the previously forecasted 7-8%.
Additionally, the company's subsidiary, Udaipur Cement Works Limited (UCWL), is expected to reach approximately 60% utilization by the fiscal year 2025.
In the first quarter, JK Lakshmi Cement reported non-cement revenue of INR1.3 billion and ready-mix concrete (RMC) revenue of INR730 million. The RMC segment achieved an EBITDA margin of around 4%.
However, the company experienced a quarter-over-quarter decline in blended realization of about 6% due to lower prices across different regions and a slight increase in clinker sales.
The management of JK Lakshmi Cement noted that average prices decreased by INR5-6 per bag month-over-month in July 2024, attributing the decline to reduced demand and aggressive volume competition from larger industry players.
Despite the current downturn, the company anticipates a recovery in prices after the monsoon season as demand typically increases, aligning with patterns observed in previous years.
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