Company Update : JK Cement by Motilal Oswal Financial Services Ltd
Robust 16% YoY volume growth; EBITDA in line
* JK Cement (JKCE)’s 1QFY26 EBITDA increased ~41% YoY to INR6.9b (in line). Consol. volume grew ~16% YoY to 5.6mt (+7% v/s our estimates). EBITDA/t increased ~22% YoY to INR1,226 (estimated INR1,266). OPM surged 3.2pp YoY to ~21% (in line). Adj. PAT increased ~75% YoY to INR3.2b (+19% vs our estimate, led by lower depreciation and higher other income vs. estimates).
* Strong volume growth was led by its extended footprint in central and Bihar markets. The company has completed the acquisition of a 60% stake in Saifco Cement (having a footprint in J&K), and has also expanded the Ujjain GU capacity by 0.5mtpa through debottlenecking. The company’s grey cement capacity stood at 25.3mtpa (including 1.06mtpa belonging to two subsidiaries). The Board has approved 0.6mtpa capacity expansion of wall putty at an investment of INR1.95b at Nathdwara, Rajasthan.
* We have a BUY rating on the stock. We will review our assumptions after the conference call.
Grey cement volume/realization increase ~17%/4% YoY
* JKCE’s consol. revenue/EBITDA/PAT stood at INR33.5b/INR6.9b/INR3.2b (+19%/+41%/+75% YoY and +4%/+4%/+19% vs. our estimate). Sales volume grew ~16% YoY (+7% vs estimates) as Grey cement volume was up ~17% YoY (+8% vs estimate) and white cement volume was up 9% YoY (in line).
* Blended realization increased 3%/1% YoY/QoQ (-3% vs. estimates). Grey cement realization was up 4% YoY but flat QoQ. White cement realization was flat YoY/up 2% QoQ.
* Opex/t was down 1% YoY (-3% vs estimates), led by ~5%/2% YoY decline in variable cost/staff cost per ton. Freight per ton increased ~7% YoY, whereas other expenses/t were flat YoY. Depreciation/interest cost declined ~1%/2% YoY, while other income increased ~26% YoY.
Highlights from investors’ presentation
* Cement/clinker capacity utilization was at 83%/92%. Blended cement sales stood at ~68% flat QoQ. Trade sales stood at 68% vs. 71% in 4QFY25. Premium product sales stood at ~14% of trade sales vs ~15% in 4QFY25.
* Green energy contributed ~52% of total energy requirements in Q1FY26, with a target to increase this share to ~75% by FY30. The thermal substitution rate was 13.2% in Q1FY26 vs. 17.3% in Q1FY25, and the company targets to increase this to 35% by FY30.
* Net debt stood at INR28.0b in 1QFY26 vs INR28.3b/INR25.7b in 1QFY25/FY25.
Valuation and view
* JKCE’s EBITDA was in line with our estimate, as the benefit of higher volume and lower opex/t than our estimates was offset by lower-than-estimated realization. However, the strong double-digit volume growth was encouraging. The company’s capacity expansion plans are progressing as scheduled, which we estimate will support its continued growth trajectory.
* We have a BUY rating on the stock and will review our assumptions after the concall on 21th Jul’25 at 11:30 AM (Link).
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