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Capacity ramp up to support volume growth

JK Cement (JKCE) reported a largely inline operating performance in Q4FY26, driven by strong grey cement volume growth of 13% YoY, supported by healthy demand and an extended footprint in Central and Eastern markets. Blended NSR declined 0.9% QoQ mainly due to white cement business impacted by the ongoing geopolitical situation at Fujairah, while grey cement realizations improved 2.4% QoQ aided by better trade mix. Cost performance remained largely stable, with lower freight and raw material costs partly offsetting the increase in power & fuel costs due to elevated pet coke prices. Resultant, JKCE reported cons blended EBITDA/t of INR1,002 (PLe INR1,026). Mgmt. indicated that recent price hikes of ~INR10/bag have broadly offset the expected input cost inflation of INR150-200/t in Q1FY27

We expect JKCE to continue delivering strong volume-led growth and market share gains across North, Central and Eastern markets, supported by ramp-up of recently commissioned capacities. Management expects double-digit volume growth in FY27, ahead of industry growth, while the next phase of expansion targeted for FY28 should further strengthen its regional presence and growth visibility. While near-term profitability may remain sensitive to elevated fuel costs amid geopolitical uncertainties, recent price hikes would be important to sustain margins going ahead. Alongside ongoing cost optimisation initiatives and strong execution capabilities, we remain positive on JKCE’s long-term growth outlook. We tweak our estimates for FY27/28E by -2.7%/+1.2% on higher opex & higher volumes, and expect JKCE to deliver EBITDA/volume CAGR of 23%/13% over FY26-28E. The stock is trading at EV of 17.6x/13.6x FY27E/28E EBITDA. Maintain ‘Accumulate’ with revised TP of Rs6,101 (earlier Rs6,017) valuing at 15x EV of Mar’28E EBITDA

Strong volumes led to growth in revenue:

Cons. Revenue grew 9% YoY to INR38.9bn (+12% QoQ; PLe of INR40.5bn) led by strong grey cement volumes. Cons. Volumes grew 12% YoY to 6.81mt (+13% QoQ; PLe of 6.76mt) led by improved demand & extended footprint in Central incl. East Market. (Grey Cement volumes grew 13% YoY to 6.16mt (+15% QoQ). White cement volumes grew 8% YoY to 0.65mt (flat QoQ on volume loss in UAE due to war). Std. revenue grew 10% YoY to INR36.8bn (+15% QoQ). Blended average NSR declined 0.9% QoQ to INR5,709/t (-3.4% YoY; PLe of INR5,849) due to decline in White cement NSR. Average grey cement realisation grew 2.4% QoQ to INR4,838/t (-1.3% YoY), while white cement NSR declined 0.7% QoQ to INR13,015/t (-1.1% YoY).

EBITDA/t declined on lower NSR and higher P&F:

Cons. EBITDA declined 11% YoY to INR6.8bn (+22% QoQ; PLe of INR6.9bn) due to higher P&F, which grew 16% YoY to INR1,084/t due to increase in fuel cost to INR1.48/kcal (Q4FY25: INR1.41/kcal, Q3FY26: INR1.5/kcal). Freight costs declined 2% YoY to INR1,333/t due to decline in lead distance to 418km (Q3FY26: 421km, Q4FY25: 434km). RM costs declined 5% YoY to INR892/t despite higher volumes and input costs. Other expenses were flat YoY at INR969/t led by better operating leverage. Std. EBITDA declined 9% YoY to INR6.7bn (+25% QoQ). Resultantly, JKCE delivered cons. EBITDA/t of INR1,002/t (-21% YoY/+8% QoQ) vs PLe of INR1,026, whereas Std. EBITDA/t declined 19% YoY to INR1,023/t (+10% QoQ). Cons. PAT declined 8% YoY to INR3.3bn (+91% QoQ; PLe of INR3bn). Std. PAT declined 17% YoY to INR3.4bn (+91% QoQ). Cement/clinker capacity utilization stood at 82%/93% (Q3FY26: 83%/97%), respectively. Trade share stood at 68% (Q3FY26: 60%) while the share of premium sales stood at 18% (Q3FY26: 17%). The share of blended cement stood at 65% (Q3FY26: 64%)

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