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Nagaur ramp up drives volume growth

JSW Cement (JSWCEMEN) delivered inline Q2FY27 operating performance, aided by robust cement volume growth and improving GGBS volumes. Total volumes grew 26% YoY, with cement volumes up 40% and GGBS volumes up 7%, supported by the rampup of Nagaur, which achieved 70% capacity utilisation in Q2FY27. Blended NSR declined 2.2% QoQ, largely due to lower cement realisations amid a change in regional mix (sold more in East). Costs remained elevated due to higher fuel, lead distance and diesel costs, alongside initial ramp-up costs at Nagaur, keeping EBITDA/t at INR707 (vs. PLe of INR701). Ex-Nagaur EBITDA/t stood at INR821, highlighting the drag from the new plant. Nagaur achieved EBITDA breakeven in Q2FY27, with EBITDA/t expected to reach INR650-700 by Q4FY27. As per Mgmt., October non-trade price hikes stood at INR15-20/bag in South, INR25-30/bag in East, INR10/bag in West and INR20/bag in North. Trade hikes of INR10-15/bag have been implemented in East

We expect profitability to improve as Nagaur incremental capacity also gets ramped up, supported by higher clinker utilisation, commissioning of WHRS, increased AFR usage, OLBC and logistics efficiencies, alongside a higher share of green power and domestic fuel. Stable GGBS input costs and management’s focus on increasing penetration should support volume growth, while the newly planned capacity additions at Dolvi (2mtpa GU) and Vijayanagar (2mtpa GGBS GU) should provide long-term growth visibility. However, the pace of margin recovery and elevated leverage amid ongoing expansion capex remain key monitorables. We expect JSWCEMEN to deliver EBITDA/volume CAGR of 16%/22% over FY26-29E. The stock is trading at EV of 12.3x/10.8x FY28/29E EBITDA. Maintain ‘BUY’ with revised TP of INR133 (earlier INR132) valuing at 13x EV of Sep’28E EBITDA.

Cement-led volume growth led to increase in revenue:

Cons. revenue grew 33% YoY to INR19.1bn (+1% QoQ; PLe INR18.5bn) on robust volume growth. Total volumes grew 26% YoY to 3.93mt (-3% QoQ; PLe 3.78mt). Cement volumes grew 40% YoY to 2.34mt (-2% QoQ) on Nagaur ramp-up, while GGBS volumes grew 7% YoY to 1.47mt (+11% QoQ). North region utilisation reached 75%. Blended NSR declined 2.2% QoQ to INR4,866/t (+5% YoY; PLe INR4,878/t) due to weaker cement pricing in North and lower GGBS NSR. Cement NSR declined 3.4% QoQ to INR4,781/t (+3% YoY), while GGBS NSR declined 1.5% QoQ to INR3,749/t (+2% YoY). Blended share increased to 63% from 62% QoQ. Trade share increased to 52% from 51% QoQ.

Cost pressures and Nagaur ramp-up weigh on EBITDA:

Cons. EBITDA grew 4% YoY to INR2.78bn (-7% QoQ; PLe INR2.65bn), mainly impacted by higher P&F costs. P&F costs/t increased 34% YoY to INR976 on higher fuel costs. RE share stood at 41% (30% in Q1FY27), while avg. fuel consumption cost increased to INR1.84/mcal from INR1.80/mcal QoQ. Freight cost/t increased 3% YoY to INR1,089 due to higher diesel costs. Lead distance increased to 294km from 285km in Q1FY27. RM costs/t increased 8% YoY to INR1,106 due to Nagaur operations and higher RMC input costs. Other expense/t increased 7% YoY to INR733 due to higher North India operating and packaging costs. Clinker factor stood at 58%. Resultant, EBITDA/t stood at INR707 (-18% YoY; -10% QoQ) vs PLe INR701/t. Ex-Nagaur, EBITDA/t stood at INR821. PAT declined 1% YoY to INR0.85bn (-47% QoQ; PLe INR0.92bn) due to higher interest costs. Net debt stood at INR42.87bn, with net debt/EBITDA at 3.26x.

Capex:

1) Company plans to add 2mtpa of GGBS grinding capacity at Vijayanagar (capex: INR5.09bn (USD27/t); commissioning expected by May’28).

2) also, plans to add 2mtpa GU at Dolvi (capex: INR5.69bn (USD30/t); commissioning expected by Oct’28). Both to be funded through mix of internal accruals and debt.

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