Wednesday 12 November 2008

Sell JK Lakshmi Cem, target of Rs 29: PINC

PINC Research has downgraded its rating on JK Lakshmi Cement to sell with a target of Rs 29 in its October 31, 2008 research report. "J K Lakshmi Cement Ltd’s (JKLC Ltd's) net sales in Q2FY09 were higher (+10%) YoY at Rs 2.9 billion. JKLC’s profitability was impacted by the dual impact of rising input costs and declining realisations. While we expect raw material costs to ease, we feel that JKLC’s pricing power in the near term may not be sufficient enough to secure a significant improvement in EBITDA/mt. This coupled with impending capex could exert substantial pressure on net profit/mt."

"Accordingly, we have downgraded our earnings estimates for FY09E and FY10E. At the CMP of Rs 38, JKLC is trading at P/E of 1.6x, EV/EBDITA of 1.5x and EV/ton of USD 21. While current valuations seem attractive, we have downgraded our recommendation to ‘SELL’, mindful of downtrend in EBITDA/mt,coupled with absence of clarity on impending capex,target of Rs 29," says PINC's research report.

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Source: Moneycontrol

Posted by Harsh at 09:23

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