JK Cement: An Underperformer, But Analysts’ Favourite

JK Cement Ltd. is the only cement maker whose volumes declined in the September quarter due to weak demand for white cement in key markets. Yet it’s the analysts’ favourite.

The company’s volume growth contracted 3 percent in the July-September quarter, according to Bloomberg data. That compares with 9-21 percent growth for peers who have some exposure in north India.

Still, more than 80 percent of the analysts covering JK Cement suggest a ‘Buy’. A consensus of analysts’ estimates tracked by Bloomberg showed that the stock is expected to gain nearly 23 percent in 12 months—the most bullish bet for a north India-based cement maker.

A scheduled capacity expansion and higher utilisation helped JK Cement to be one of the largest cement makers in north India, Chola Securities said in a note. The brokerage, which recommended a ‘Buy’, also indicated the management’s optimism to meet the 7 percent volume growth guidance for the ongoing financial year despite the decline in September quarter.

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