Author: root

JK Lakshmi Cement

In a 12-month target period, the brokerage has set a target price of Rs 785 on JK Lakshmi Cement, signifying a potential upside of up to 28 percent over the current market price of Rs 620.55. However, at the time of the buy call of the brokerage, the market price was Rs 615.

Q2FY22 Results:

“Owing to volume letdown and increased cost pressure, the results stayed poor. Revenues were up 7% to Rs 1118.2 crores led by sales realization growth of 10.3% YoY to Rs 4,820. Sales volume was down 2.9% YoY to 2.32 MT. EBITDA/t was down 10.3% YoY to Rs 701/t (vs. I-direct estimate of Rs 738/t). EBITDA margin was at 14.5%, down 333 bps YoY, 301bps QoQ. PAT of Rs 76.6 crore was down 5% YoY vs. (lower than the estimate of the brokerage: Rs 82.4 crore)” according to ICICI Securities.

Key triggers for future price-performance according to the brokerage:

• With expected utilisation of 94%+ for FY22E, volume growth to moderate going forward as the new capacity will come on stream only in FY24E.
• WHRS of 10 MW to get commissioned by Q3FY22 that should help contain power cost.
• B/s strength to remain strong despite newly announced Capital Expenditure (CAPEX) of ~ Rs 1400 crore for its subsidiary unit UCWL.

Target Price and Valuation:

JK Lakshmi’s share price has grown by ~2.5x over the past three years (from ~ Rs 331 in August 2018 to Rs 816 in July 2021). We value the company at Rs 785 i.e.10x FY23E EV/EBITDA and we remain positive on the company and maintain BUY rating, said the brokerage.

“While the company may remain laggard in terms of growth during FY21-23E due to delayed capacity expansion (likely commissioning Q3FY24E), the focus on strengthening b/s with significant debt reduction in FY22E remains key positive. Given constructive sector outlook, we maintain the positive stance of the company and retain our BUY rating with revised TP of Rs 785/share (@ 10x FY23EV/EBITDA),” the brokerage has said.

Shree Cement

The brokerage has set a target price of Rs 34,500 on Shree Cement stock, implying a potential upside of up to 18% over the current market price of Rs 29,220 in an estimated period of 12 months. Nevertheless, the market price at the time of the brokerage’s buy call was Rs 29,150.

Q2FY22 Results:

“Revenues were up 5% YoY on sustained higher realisations. Volumes were down 3.6% YoY on heavy monsoon and transporters strike in the east. EBITDA/t of Rs 1427/t (down 7.5% YoY) remained ahead of our estimates and PAT was up 5.6% YoY to Rs 577.7 Crore on lower tax, higher other income” said ICICI Securities.

Key triggers for future price performance according to the brokerage:

• Commissioning of a grinding unit of 3 MT in Maharashtra to take its domestic capacity to over 46.4 MT. The new clinker unit in Chhattisgarh (capacity of 12000t/day) to get commissioned by Q4FY22 (Capital Expenditure (CAPEX) of Rs Rs 1000 crore)
• New CAPEX includes setting up of a new integrated unit with 3.5 MT GU and 3.8 MT clinker unit in Rajasthan, 3 MT grinding unit in WB, 106 MW solar power at various locations with a total CAPEX of Rs 4750 crore till FY24E. Total domestic capacity to reach 53.4 MT post these expansions.
• The company will continue to maintain its cost leadership due to the structural advantage it has in terms of accessing raw materials and markets.
• The recent price hikes of 7-9% in October 2021 to sustain on the back of healthy demand and help recoup margins, to some extent.

Target Price and Valuation:

With volume-led expected revenue CAGR of 18.7% and expected RoCE of 20%+, we remain positive on the company. Hence maintain BUY rating and we value Shree at Rs 34,500 i.e.22x FY23E EV/EBITDA said the brokerage. “Cost leadership, a strong presence in north & east along with robust balance sheet justifies premium valuations, ICICI Securities further added.

Disclaimer

The above stocks are picked from the brokerage report of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

LIC’s Jeevan Akshay is an Immediate Annuity plan is a single premium policy. That means the policyholder will have to buy the plan with a lump sum amount, while the annuity is available on a monthly, quarterly, biannually or annually basis.

Annuity options

There are multiple annuity options available under the LIC Jeevan Akshay policy. According to LIC, the available options have been enlisted below.

Option A: Immediate Annuity for life.
Option B: Immediate Annuity with a guaranteed period of 5 years and life thereafter.
Option C: Immediate Annuity with a guaranteed period of 10 years and life thereafter.
Option D: Immediate Annuity with a guaranteed period of 15 years and life thereafter.
Option E: Immediate Annuity with a guaranteed period of 20 years and life thereafter.
Option F: Immediate Annuity for life with return of Purchase Price.
Option G: Immediate Annuity for life increasing at a simple rate of 3% PA.
Option H: Joint Life Immediate Annuity for life with a provision for 50% of the annuity to the Secondary Annuitant on the death of the Primary Annuitant.
Option I: Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of the annuitants survives.
and,
Option J: Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of
the Annuitant survives and returns of Purchase Price on the death of the last survivor.

LIC has fixed the Annuity Mode into Monthly, Quarterly, Half-yearly, and Annual modes. The Minimum Annuity is Rs. 1,000 per month, Rs. 3,000 per quarter, Rs. 6,000 per half-year, and Rs. 12,000 per annum.

Benefits of the LIC Jeevan Akshay policy

For Option A

• The annuity payments will be made in arrears till the Annuitant is alive, according to the mode of the annuity payment.
• On the death of the Annuitant, nothing shall be payable and the annuity payment shall cease immediately.

For Option B,C,D,E

• The annuity payments shall be made in arrears for as long as the Annuitant is alive, according to the annuity payment mode.
• On the death of the Annuitant during the guaranteed period of 5/10/15/20 years, the annuity will be paid to the nominee(s) till the guaranteed period.
• On the death of the Annuitant after the guaranteed period, nothing will be paid and the annuity payment will cease immediately.

Option F

• The annuity payments will be paid in arrears for as long as the Annuitant is alive, according to the annuity payment mode.
• On the death of the annuitant, the annuity payment will cease immediately, and Purchase Price will be paid to nominee(s) as per the option chosen by the Annuitant.

Option G

• The annuity payments will be made in arrears for as long as the Annuitant is alive, according to the annuity payment mode. The annuity payment will be increased by a simple rate of 3% PA for each completed policy year.
• On the death of annuitant nothing shall be payable and the annuity payment shall cease immediately.

Option H

• The annuity payments will be paid in arrears till the Primary Annuitant is alive, according to the annuity payment mode.
• On the death of the Primary Annuitant, 50% of the annuity amount will be paid to the surviving Secondary Annuitant till the Secondary Annuitant is alive. The annuity payments will cease on the subsequent death of the Secondary Annuitant.
• If the Secondary Annuitant predeceases the Primary Annuitant, the annuity payments will continue to be paid and will cease upon the death of the Primary Annuitant.

Option I

• 100% of the annuity amount shall be paid in arrears for as long as the Primary Annuitant and/or Secondary Annuitant is alive, according to the annuity payment mode.
• On the death of the last survivor, the annuity payments will cease immediately and nothing will be paid.

Option J

• 100% of the annuity amount will be paid in arrears till the Primary Annuitant and/or Secondary Annuitant is alive, according to the annuity payment mode.
• On the death of the last survivor, the annuity payments will cease immediately, and Purchase Price will be paid to the nominee(s) according to the option exercised by the Primary Annuitant.

Minimum Annuity Chart

Source: LIC

Eligibility and minimum purchase

The minimum entry age for the LIC Jeevan Akshay Plan is 30 years, while the maximum entry age is 85 years. However, for the above-mentioned Option F, the maximum entry age can be 100 years.

The Minimum Purchase Price of the plan is Rs. 1,00,000, but this will depend on the Minimum Annuity as specified below. There is no limit on the maximum purchase price.