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On Tuesday, ICICI Securities adjusted its stance on JK Cement Ltd (JKCE:IN), changing the stock rating from Buy to Add while maintaining the price target at INR 5,101.00. The revision follows JK Cement's report of a significant improvement in margins for the third quarter of fiscal year 2025.
JK Cement experienced a notable increase in margins, approximately 660 basis points quarter-over-quarter, reaching 18%. This performance, however, still reflected a year-over-year decrease of 380 basis points. The results were in alignment with ICICI Securities' projections. The firm's analysts noted that JK Cement's positive outlook on demand and pricing dynamics provides a solid foundation to maintain current estimates.
Despite the positive aspects, ICICI Securities cited the recent surge in JK Cement's stock price as a contributing factor for the rating downgrade. The analysts pointed out that the stock is trading at a premium valuation—16 times the fiscal year 2026 estimated EV/EBITDA, compared to industry leader UltraTech Cement (NSE:ULTC)'s 18 times—and saw little justification for an upward revision in valuation multiples.
The strategic growth plans of JK Cement remain a key highlight, with the company's capital expenditure project aimed at increasing its capacity to 30 million tonnes per annum (mtpa) from the current 24 mtpa by the end of fiscal year 2026. Moreover, JK Cement has set an ambitious target to reach a capacity of 50 mtpa by 2030. ICICI Securities emphasized that JK Cement's long-term growth narrative continues to be robust and intact.
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