Buy JK Lakshmi Cement Ltd for the Target Rs. 855 by Choice Institutional Equities
Key Conference Call Highlights
FY27 demand outlook remains healthy
* Management expects cement demand growth of ~6% in FY27 despite ongoing geopolitical uncertainties
* Demand improved after mid-May as labour availability normalised post elections Significant cost inflation ahead
* Q1FY27 cost inflation expected at INR100–130/t, increasing to nearly INR300/t by Q2FY27
* Petcoke prices surged 40% QoQ to USD 160/t, while coal prices increased 30% QoQ
* Packaging cost expected to rise by INR80–100/t
* Diesel price hikes could increase logistics costs by INR15–16/t
Margin recovery strategy
* Management aims to improve EBITDA/t by INR50–75/t in FY27 through internal efficiency initiatives
* Long-term target remains INR1,000 EBITDA/t, compared to FY26 exit level of ~INR730/t
* Focus areas include fuel mix optimisation, renewable energy expansion and pricing improvements
Large expansion pipeline
* Confident of achieving 30 MTPA capacity by FY30
* Durg expansion project expected to be commissioned by the end of FY28
* Northeast clinker and grinding project targeted for FY29 commissioning
* Future growth projects include Kutch and Nagaur expansions
Aggressive capex program
* FY27 capex guidance at INR 15–17 Bn and FY28 capex expected at ~INR 20 Bn. Around INR 5 Bn has already been spent on the Durg project
Renewable energy and cost leadership focus
* Renewable power share has reached 46% and will continue to increase
* Fuel mix optimisation (petcoke vs coal) is underway to mitigate imported fuel inflation
* AI/ML initiatives being deployed to improve operational efficiency and lower cost
For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131
