Company Update : JK Cement Ltd by Motilal Oswal Financial Services Ltd
Robust 14% YoY volume growth; EBITDA in line
* JK Cement’s (JKCE) 2QFY26 EBITDA increased ~57% YoY to INR4.5b (in line). Consol. volume grew ~14% YoY to 5.0mt (in line). EBITDA/t increased ~37% YoY to INR894 (estimated INR934). OPM surged 3.7pp YoY to ~15% (85bp below estimate). Adj. PAT increased ~347% YoY to INR1.6b (in line), led by higher other income vs. estimates.
* Construction work has commenced for the integrated unit in Jaisalmer, Rajasthan, which is scheduled for commissioning in 1HFY28. Meanwhile, the 0.6MTPA capacity expansion at Nathdwara, Rajasthan, is expected to be completed by 2QFY27. The company’s grey cement capacity stood at 26.26mtpa (including 0.42mtpa belonging to two subsidiaries).
Grey cement volume/realization increase ~16%/3% YoY
* JKCE’s consol. revenue/EBITDA/PAT stood at INR30.2b/INR4.5b/INR1.6b (+18%/+57%/+347% YoY and +3%/-3%/-2% vs. our estimate). Sales volume grew ~14% YoY (in line) as grey cement volume was up ~16% YoY (in line) and white cement volume was up 5% YoY (in line).
* Blended realization increased 3% YoY/1% QoQ (+1% vs. estimate). Grey cement realization was up 3% YoY but declined 2% QoQ. White cement realization was up 8% YoY/3% QoQ.
* Opex/t was down 1% YoY (+2% vs. estimate), led by ~4%/1% YoY decline in employee cost/variable cost per ton. Freight expenses/other expenses per ton declined ~1% YoY (each). Depreciation increased ~2% YoY, while interest cost declined ~14% YoY. Other income increased ~35% YoY.
* In 1HFY26, revenue/EBITDA/adj PAT stood at INR63.7b/INR11.3b/INR4.8b, up ~19%/47%/119% YoY. OPM increased 3.5pp YoY to ~18%. EBITDA/t increased ~28% YoY to INR1,070. OCF stood at INR5.1b vs. INR3.0b in 1HFY25. Capex stood at INR10.1b vs. INR7.5b. Net cash outflow stood at INR6.5b (including INR1.5b spent on acquiring stake in Saifco Cements Private Limited) vs. INR4.4b in 1HFY25.
Highlights from investor presentation
* Cement/clinker capacity utilization stood at 69%/90%. Blended cement sales stood at ~67%, down ~1% QoQ due to lower trade sales. Trade sales stood at 67% vs. 68% (each) in 2QFY25/1QFY26. Premium product sales stood at ~15% of trade sales vs. ~14% in 1QFY26.
* Green energy contributed ~53% of total energy requirements in 2QFY26, with a target of increasing this share to ~75% by FY30. The thermal substitution rate was 12.3% in 2QFY26 vs. 13% in 2QFY25, and the company targets to increase this to 35% by FY30.
* Net debt stood at INR31.4b vs. INR30.4b/INR25.5b in 2QFY25/FY25.
Valuation and view
* JKCE’s EBITDA was in line with our estimate, aided by strong double-digit volume growth and improved margins. Capacity expansion projects are progressing as planned, which should reinforce its growth momentum.
* We have a BUY rating on the stock and will review our assumptions after the concall on 4th Nov’25 at 4pm (Link).
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