Buy JSW Cement Ltd for the Target Rs. 142 By Prabhudas Lilladher Ltd
JSW Cement (JSWCEMEN) delivered a steady operating performance in Q3FY26, aided by robust 17% YoY GGBS volume growth and 7% in cement. Blended NSR fell 1.4% on softer cement pricing, lower trade mix and fall in non-trade prices. P&F costs declined on increase in RE share and operational efficiencies, other expenses declined sharply led by strong operating leverage and lower branding spend while RM costs were elevated due to higher OPC mix, increased inter-plant transfers and higher clinker costs in West resulting to EBITDA/t of Rs801. P&F costs are expected to be lower in Q4FY26 with enough inventory till Apr’26.
JSWCEMEN’s long-term growth trajectory remains compelling, supported by group’s strong execution, rising acceptance of GGBS across markets and healthy demand witnessed across infrastructure-led markets such as MMR, AP & TS. Structural support from JSTL through long term slag contract and its, availability is expected to continue, while ongoing cost-saving initiatives are expected to support margins. As 3.5mtpa IU getting commissioned in Q4FY26, mgmt. is confident of achieving ~50% utilization in FY27 driving incremental volumes. With its robust expansion pipeline targeting 34mtpa by FY29E, we believe the company is well placed for sustained volume growth. We tweak our EBITDA estimates by 1/-1% and expect it to deliver EBITDA/volume CAGR of 31%/15% over FY25-28E. The stock is trading at EV of 13x/11.7x FY27/28E EBITDA. Maintain ‘BUY’ with revised TP of Rs142 (earlier Rs145) valuing at 13x EV of Mar’28E EBITDA.
* Revenue grew on strong 17% GGBS volume growth: Cons. revenue increased 13% YoY to Rs16.2bn (+13% QoQ) on strong GGBS volume. Total volumes grew 14% YoY to 3.56mt (+14% QoQ). Cement volumes grew at 7% YoY to 1.89mt (+15% QoQ) while GGBS volumes grew robust 17% YoY to 1.53mt (11% QoQ). Average NSR declined 1.4% QoQ to Rs4,554/t (-1% YoY) due to decline in Trade share to 47% (from 52% in Q2FY26) and lower cement prices. Cement NSR declined 4% QoQ to Rs4,459 (flat YoY) due to decline in Southern region, while GGBS NSR declined 0.8% QoQ to Rs3,655 (-4% YoY). Blended share declined to 63% from 67% in Q2FY26.
* EBITDA/t aided by lower costs: EBITDA grew strong 92% YoY to Rs2.85bn (7% QoQ) led by strong GGBS performance and absence of FV loss post conversion of CCPS into equity. P&F costs/t declined 2% YoY to Rs664 on increase in RE share to 24.8%. Freight cost/t declined 5% YoY to Rs1,053 driven by reduction in lead and efficiencies (Lead distance declined to 273km from 281km YoY). RM costs/t increased 5% to Rs1,164 due to higher OPC mix, increased inter-plant transfers and higher clinker costs in West. Other expense/t declined 17% YoY to Rs618 on lower branding spend and strong operating leverage. Resultant, EBITDA/t works out at Rs801 (68% YoY/ -10% QoQ). PAT turned positive YoY to Rs1.16bn (77% QoQ). JSWCEMEN has recognized Rs0.33bn under the new labour code as an exceptional item.?
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SEBI Registration number is INH000000933.
