JK Lakshmi Cement Surges 18% in a Week: Should You Buy?

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StockEdge Spotlights Expansion Plan of JK Lakshmi Cement

By S JHA

MUMBAI, July 2, 2025 – JK Lakshmi Cement Ltd. (JKLAKSHMI) has grabbed investor attention with an impressive 18% rally in just one week, including a 3.7% surge today, according to an analysis by StockEdge shared on its Telegram channel.

However, the Relative Strength Index (RSI) hit 78.9. StockEdge noted “overbought conditions” for the stock. Analysts warn of a potential short-term pullback, advising investors to wait for a price correction before entering new positions.

Technical Strength and Delivery Support

The stock’s recent performance is backed by strong delivery volumes, reflecting robust participation from long-term investors. StockEdge notes that weekly delivery volumes stood at 62% for the week ending June 28 and 60.5% for the week ending June 21, indicating sustained investor confidence. The stock is trading above key moving averages, reinforcing a bullish trend in the short to long term.

Despite the short-term overbought signal, JK Lakshmi Cement has outperformed its peers over longer periods. “Over five years, the stock delivered a 280% return, surpassing Nifty Infrastructure’s 208%, and over ten years, it gained 181% compared to Nifty Infra’s 184%. The three-year price CAGR remains strong at 31.57%, highlighting its consistent growth,” added StockEdge in its analysis.

Fundamentals Show Challenges but Growth Potential

On the fundamental front, JK Lakshmi Cement faced headwinds in the trailing twelve months (TTM), with net sales declining by 8.78%, EBITDA dropping 17.8%, and net profit falling 35.8%. Despite these challenges, the company’s long-term outlook remains promising, driven by ambitious expansion plans. The company has allocated ₹3,100 crore for capital expenditure in FY26 and FY27 to boost its production capacity to 30 million tonnes per annum (MTPA) by FY30.

Key initiatives per IndMoney include a conveyor belt project set for completion by March 2026 and increasing the share of green power to 52%, aligning with sustainability goals. Additionally, JK Lakshmi aims to reduce costs by ₹100–₹120 per tonne over the next 12–18 months, which could improve margins.

Market analyst @Maybajpa on X noted that while the stock’s expansion pipeline and digital/logistics advancements are respectable, its smaller quantum and delayed timelines may lag behind competitors in near-term margin leverage. @elearnmarkets highlighted the stock’s breakout above resistance levels but warned of potential profit-booking due to the overbought RSI.

The cement sector has seen significant activity, with stocks like UltraTech, Ramco, Dalmia, and JK Lakshmi hitting 52-week highs recently. JK Lakshmi’s current market capitalization stands at approximately ₹10,276.72 crore, with a P/E ratio of 21.78 and a P/B ratio of 3.06 as of May 21, 2025. The stock’s 52-week range is ₹660.50 to ₹935, with analysts forecasting a median target price of ₹885.73 over the next 12 months.

However, challenges remain, including delays in capacity expansions in the Northeast and Surat, as well as increased leverage due to higher capex. Antique Stock Broking projects net debt could rise to ₹2,500 crore by FY27 from ₹1,400 crore currently. Despite these hurdles, the company’s focus on premium products (25% of sales in Q4FY25) and cost-efficiency measures positions it for potential recovery, according to a report by LiveMint.

(Disclaimer: Stock investments are subject to market risks. Investors should conduct thorough research and consult financial advisors before making decisions.)

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