Analysts from HDFC Securities recently engaged with the management team of JK Lakshmi Cement, reaffirming their Buy rating and target price for the stock. The brokerage anticipates a compounded annual growth rate (CAGR) of 9% over the next two years as the cement giant gears up for significant expansion in northern markets. With the introduction of a new brand aimed at boosting sales and decreasing fuel costs, HDFC Securities has set a target price of Rs 872, reflecting a 20% upside potential.

Growth Prospects for JK Lakshmi Cement

HDFC Securities predicts a turnaround for JK Lakshmi Cement, particularly in FY25, despite initial slow growth. The company has initiated a brand enhancement strategy while bolstering its green energy initiatives and reducing lead distances. A significant drop in crude oil prices is expected to alleviate pressure on margins in FY25, which should begin to improve by FY26. “We project unit EBITDA to recover from a six-year low of Rs 648 per MT in FY25 to Rs 863/968 per MT in FY26/27,” noted analysts at HDFC Securities.

New Brand Launch to Drive Profitability

The upcoming launch of a new brand titled Green+ is anticipated to significantly enhance profitability for JK Lakshmi Cement. This new product aims to position itself above existing premium brands in terms of pricing, catering to a market eager for quality. The management has reported a positive response to Green+, indicating a promising surge in sales in the near future. “JKLC expects a noticeable increase in premium cement sales, with an overall NSR/unit EBITDA gain of INRs 100/70 per MT,” stated the brokerage.

Cost-Reduction Strategies in Play

Like many of its industry peers, JK Lakshmi Cement is actively pursuing various cost-cutting measures. The company plans to increase its use of green power and fuel while minimizing lead distances. Progress has already been made in this area, with more milestones on the horizon. “The proportion of low-cost green power consumption has steadily risen from 25/35% in FY22/23 to 39/47% in FY24/25,” mentioned HDFC Securities. Additionally, declining fuel prices have reduced JK Lakshmi Cement’s consolidated fuel expenses by Rs 160 per MT year-on-year in FY25, with projected savings of Rs 25 per MT in FY26.

In summary, JK Lakshmi Cement is strategically positioned for growth through innovative branding, cost optimization, and sustainable practices. For investors seeking opportunities in the cement sector, this company presents a compelling case for consideration.