New Delhi,  Brokerage house Centrum Broking has given a "buy" call for cement maker JK Lakshmi Cement's stocks.

It pegged a target price of Rs 551, as against current market price of Rs 491.

The company's subsidiary, Udaipur Cement opted to set up an entire 2.5 mtpa grinding unit (the earlier plan was a separate 1 mtpa split grinding unit), along with 1.5 mtpa clinker unit in Udaipur, and it is expected to be commissioned by FY24.

The company has ordered long delivery equipment.

The savings on having the entire 2.5 mtpa grinding unit at one place was more than offset by higher commodity prices and the total estimated capex at Rs16.5 billion, the brokerage said in a report.

To break it down, the capex is estimated to be Rs 7 billion in FY23 and Rs 9.5 billion in FY24 on the expansion plan.

The incremental capacity which is expected to be commissioned by FY24 will provide volume growth for the cement maker from FY25 onwards, it said in the report.

With a wide network of over 400 cement dumps and more than 7000 channel partners, JK Lakshmi Cement brand enjoys a premium position in the market.