JK Lakshmi Cem builds up

JK Lakshmi Cement is currently the top gainer on the BSE. It is up 7.5% at Rs.368 levels with volumes jumping up over 5 times. Its 52-week high is at Rs.409.80.

The market is thrilled to bits with the company’s Q4FY16 performance. It posted a net profit of Rs.48 crore, up from Rs.6 crore in previous Q4. Production was up 42%  and its sales rose 28% at Rs.825 crore; the company said that the sales was lower than the production due to lower cement prices. EBITDA for the quarter came in at Rs.35% at Rs.120 crore. Costs were up 8%, driven mainly by a 48% rise in depreciation on account of commissioning of the first phase of the greenfield plant at Durg, and 41% in transport and clearing charges.

A closer look though shows that the numbers were really not all that great; the jump in net profit was thanks to the lower base effect. In Q4FY15, the company had an exceptional expense of Rs.32 crore and this is what pulled down its profit. In fact Q4FY16 profit before tax and this exceptional expense shows a 17% (YoY) drop. So without this expense and a tax write back of Rs.17 crore, naturally the company ended the quarter with a thumping jump in net profit. A substantial, 88% jump in other income at Rs.34 crore also helped.

The company ended FY16 with a consolidated net profit of Rs.15 crore v/s Rs.103 crore in FY15. Tax write back of Rs.54 crore is what pulled back the company into the black in FY16. Its borrowings currently stands at Rs.2044 crore.

Its Durg plant achieved 100% capacity utilization  and its newly commissioned Surat Grinding Unit has started trial runs. Its cement project at Udaipur is on schedule and is likely to commence production during this fiscal. It expects a better performance this fiscal given the good monsoon forecast and hopefully, more infra projects from the Govt.