JKCEMENT - J.K. CEMENT LTD Share Price

Management provided an optimistic outlook for JK Cement, projecting strong operational performance driven by ongoing and planned expansions. Key points discussed include:

1. Sales Performance: Standalone net sales increased by 14% quarter-on-quarter, reaching INR 3,132 crores compared to INR 2,754 crores in the previous quarter, and up 19% year-on-year from INR 2,630 crores.

2. EBITDA Growth: For Q3, EBITDA was reported at INR 536 crores, a 22% increase over the previous quarter and a 10% increase year-on-year. For the nine-month period, EBITDA reached INR 1,648 crores, up 34% compared to INR 1,232 crores last year.

3. Consolidated Net Sales: For the same quarter, consolidated net sales stood at INR 3,383 crores, showing a 15% increase sequentially and 20% year-on-year. The nine-month consolidated sales were INR 9,565 crores, up 19% from INR 8,028 crores.

4. Profit Before Tax: Profit before tax increased to INR 276 crores in Q3 compared to INR 261 crores in the previous quarter, although slightly lower than INR 290 crores in Q3 last year. For the nine months, profit before tax was INR 1,034 crores, reflecting a 62% increase.

5. Expansion Plans: The company is advancing with a brownfield expansion in Central India and expects to commission a new grinding facility in Buxar by the end of February 2026. The greenfield project in Jaisalmer is also underway, with a target completion by September 2027.

6. Volume Projections: For FY 2026, volume is expected to reach 20 million tonnes, with growth rates anticipated to be in the range of 12%-15% for FY 2027 and FY 2028.

7. Debt Outlook: Management expects net debt to rise to approximately INR 2,000 crores but remains focused on maintaining good balance sheet health.

8. Cost Management: The company has leveraged lower local coal prices and alternative fuels to manage costs effectively, boosting their overall margins.

All these elements underlie management's confidence that JK Cement is well-positioned for sustained growth in the upcoming years.

1. Question: "Just on incentives booked, could you give that number for Q3?" Answer: "The Q3 number of incentives is lower due to the GST rate cut, around INR 25 crores. Last quarter's figure was INR 86 crores, and this quarter it is INR 60 crores. We don't expect this to increase soon; with Buxar starting, we'll be taking project GST credit, keeping the run rate at INR 60 crores this quarter."

2. Question: "What sort of growth are we targeting for 2027 and 2028 from a volume perspective?" Answer: "We expect double-digit growth but not mid-teens, likely around 12% to 15%. By 2026, we're looking at 20 million tonnes, with projections for 2027 at 22.5 million to 23 million tonnes, and 25.5 million tonnes thereafter."

3. Question: "What incentives do we expect for next year?" Answer: "We anticipate a decrease in incentives per tonne due to the increased volume. However, with new units getting eligibility, we expect the annual amount to rise again to around INR 300 crores, potentially reaching an exit run rate of INR 75 crores quarterly by FY 2027."

4. Question: "What is the current CC ratio, and do we see any risk of clinker shortages for H2 FY 2027?" Answer: "Our CC ratio is 67%, and we do not foresee any clinker shortages; we have complete clinker backup for our cement capacity, ensuring stability in production."

5. Question: "How are you seeing demand trends over the next two quarters to three quarters across key regions?" Answer: "Currently, we see good demand, with the March quarter anticipated to be one of our best. Overall, we expect a year-on-year growth resulting in an industry growth of about 7% - 8%, leading to a positive outlook for volumes."

6. Question: "What improvement have we seen in January pricing?" Answer: "We have observed a recovery of about INR 15 to INR 20 in non-trade pricing. While trade pricing hasn't seen a clear increase, removing pressure on discounts suggests potential for future increases based on demand dynamics."

7. Question: "What is the clinker production number for the quarter?" Answer: "The clinker production for this quarter stands at 3.6 million tonnes."

8. Question: "What is the segmental strategy regarding the paint business, particularly profitability timelines?" Answer: "The paint turnover for this quarter is INR 103 crores. We expect to trim losses this year, aiming for a breakeven by FY 2027 when we surpass INR 500 crores in turnover and improve our gross margins."

9. Question: "Any comments on the spread between trade and non-trade pricing across regions?" Answer: "The pricing gap between trade and non-trade is approximately INR 20 to INR 30 now, down from INR 60 to INR 70 previously, with improvements seen across all regions."

10. Question: "Can you share the CAPEX numbers for FY 2026, FY 2027, and FY 2028?" Answer: "For FY 2026, we project CAPEX between INR 2,500 crores and INR 2,800 crores, including INR 600 crores for Jaisalmer. FY 2027's CAPEX is estimated at INR 3,500 crores, mainly for the 7 million tonne expansion, while FY 2028 is expected to see INR 1,000 crores to INR 1,200 crores in spillover CAPEX."