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EBITDA miss; demand outlook constructive Capacity expansion and cost initiatives remain on track

* JSW Cement’s (JSWC) 1QFY27 revenue grew 22% YoY to INR19.0b. However, EBITDA declined ~7% YoY to INR3.0b (6% miss, led by higher-than-estimated opex/t). OPM contracted 4.9pp YoY to ~16% (est. ~18%). EBITDA/t declined ~20% YoY to INR784 (est. INR835). Adj. PAT increased ~11% YoY to INR1.2b (~17% beat led by higher-than-estimated share of profits in joint venture).

* Management indicated that cement demand is expected to improve QoQ in 2Q despite the monsoon, with early signs of recovery visible in Jul’27. The North business is ramping up well, with utilization improving to ~68% in Jun’26 from ~55% in 1Q. The additional 1.0mtpa grinding capacity at Nagaur remains on track for commissioning by end-2QFY27. It expects North operations to reach EBITDA breakeven by Sep’26. The WHRS, OLBC, and AFR systems are nearing completion and are expected to materially improve the North cost structure. Management is targeting a net debt-to-EBITDA ratio of <3.0x.

* We maintain our EBITDA estimates for FY27/FY28. However, we raise our PAT estimates by ~9% for FY27, primarily due to higher share of profits in joint venture. We value JSWC at 14x FY28E EV/EBITDA to arrive at our TP of INR146. Reiterate Neutral.

Sales volume up ~15% YoY; blended realization/t up ~6% YoY

* Consolidated revenue/EBITDA/Adj PAT stood at INR19.0b/INR3.0b/INR1.2b (+22%/-7%/+11% YoY and +5%/-6%/+17% vs. estimates). Sales volume increased 15% YoY to 3.8mt (in line). Of this, cement volume stood at 2.34mt (up 27% YoY) and GGBS was at 1.33mt (3% YoY). Blended realization per ton grew ~6% YoY (+5% QoQ) to INR4,977/t (~5% above estimates).

* Opex/t increased ~12% YoY to INR4,194 (~7% above our estimates), led by ~15%/33% increase in variable cost/other expenses per ton. Freight cost/t declined ~1% YoY. Depreciation increased ~25% YoY. Interest cost declined ~5% YoY. Other income declined ~16% YoY.

* Net debt stood at INR35.6b vs. INR36.4b as of Mar’26. Net debt-to-EBITDA ratio stood at 2.95x (TTM) vs. 2.72x as of Mar’26.

Valuation and view

* JSWC’s 1QFY27 operating performance was below our estimates due to input cost pressure and higher marketing expenses for its North region plant. Management remains confident that strong demand momentum will continue, supported by infrastructure and housing segments. It expects high-teens volume growth in FY27, coupled with high-single-digit GGBS growth. Elevated marketing spends, higher fuel costs, and initial ramp-up losses in the North will weigh on near-term profitability. The company expects profitability at the North plant to improve in the coming quarters, led by efficiency measures coming on stream.

* We estimate a CAGR of ~20%/20%/14% in revenue/EBITDA/adj. PAT over FY26- 28. EBITDA/t is estimated at INR875/INR938 in FY27/FY28 vs. INR915 in FY26. Net debt is expected to remain elevated at INR64.2b in FY28 vs. INR35.8b as of FY26 due to aggressive capex. The net debt-to-EBITDA ratio is estimated to increase to 3.6x by FY28 vs. 2.9x in FY26. At CMP, the stock is trading fairly at 16x/13x FY27E/FY28E EV/EBITDA. We value JSWC at 14x FY28E EV/EBITDA to arrive at a TP of INR146. Reiterate Neutral.

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