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JK Lakshmi Cement Ltd

| Q2 & H1 FY 2026 Earnings Conference Call

NEUTRAL SENTIMENT

Report Source

⬤7th Nov 25

Summary : JK Lakshmi Cement is expanding capacity to 30 MT by FY30, focusing on internal efficiencies and premium products, despite cost pressures and project delays.

Management Perspective positive : We are happy to inform that the orders for all the major long delivery items have been placed. We are on the track for savings and premium product growth. We believe we will do better than the industry in volume growth. The initial impact of our actions is very positive.

Concall Report Analysis & Insights

Business Overview

  1. Current capacity is 18 million tons with Surat grinding unit commissioned.
  2. Improved sales proportion in North, including Gujarat, to 69%.
  3. Premium product proportion increased from 23% to 26% of real volume.
  4. Commissioning of Surat grinding station boosted Gujarat volumes and realizations.
  5. Non-cement revenue for the quarter was Rs. 153 crores, with 4% EBITDA margin.

Future Growth Prospects

  1. Targeting 30 million tons capacity by FY '30 through expansions.
  2. Durg Brownfield expansion will increase capacity to 22.6 MT by FY '28.
  3. Major equipment orders for Durg expansion have been placed.
  4. Three Greenfield plants planned for Nagaur, Kutch, and Assam by FY '29-'30.
  5. Working on land acquisition and external clearances for Greenfield projects.

Management Insights

  1. Committed to achieving Rs. 120 of cost savings over 18-24 months.
  2. Deploying AI/ML technology to improve performance and efficiency.
  3. New Green Plus brand is performing well, bridging price gaps.
  4. Expects to outperform the industry in volume growth in coming quarters.
  5. Working on ground-level discipline and reducing channel partner conflicts for better realization.

Signs of Skepticism

  1. Greenfield CAPEX for Nagaur, Kutch, and Assam is not yet finalized.
  2. Timelines for overland conveyor belt approval are uncertain due to external dependencies.
  3. Management finds it difficult to quantify specific gains from ground-level discipline.
  4. EBITDA per ton guidance of Rs. 1,000 seems ambitious given current industry trends.

Risk Factors

  1. External market conditions and competitive landscape impact EBITDA per ton.
  2. Geopolitical factors and supply chain issues affect Petco prices.
  3. Unseasonal rain and Diwali impacted Q2 demand and realizations.
  4. Non-trade prices have declined in almost all markets.
  5. Delay in Ministry of Steel approval for overland conveyor belt.

Good To Know

  1. Q2 green power proportion was 46% due to plant shutdowns and less solar generation.
  2. Trade prices are largely intact, but non-trade prices have seen a decline.
  3. Lead distance reduced from 399 kilometers to 395 kilometers.
  4. Receivables nearly doubled from March to September.
  5. The Rs. 125 crore Agrani payment recovery process is currently sub judice.

Key Drivers

  1. Durg expansion orders placed.
  2. New Green Plus brand performing well.
  3. Internal efficiency drives yielding results.
  4. Expects industry outperformance in volume.

Key Analyst Discussions

Competitive Environment

  1. Management aims to align EBITDA per ton closer to peer group performance.
  2. Acknowledged that the entire industry's EBITDA is currently less than Rs. 1,000.

Market Trends & Consumer Behavior

  1. Demand pressure led to non-trade price dilution in most markets.
  2. Expects demand to improve from November onwards, stabilizing non-trade prices.
  3. Industry volume growth was 6-7% in Q2, but October was muted due to Diwali and unseasonal rain.

Financial Highlights

  1. Non-cement revenue was Rs. 153 crores with a 4% EBITDA margin.
  2. Higher QOQ cement realization attributed to SBS, North sales, premium mix, and Surat GU.
  3. Full-year CAPEX guidance is Rs. 1,000-1,200 crores, with Rs. 1,300-1,500 crores for next two years.
  4. Power and fuel costs increased due to lower green power proportion and higher Petco prices.
  5. Freight costs rose due to sales in non-core markets for utilization improvement.

Product Composition

  1. Blended cement is 62%, premium cement is 26% of total volume.
  2. Geographical mix shift in Q2 improved blended realization.
  3. Green Plus brand is performing well, contributing to price positioning.

Strategic Considerations

  1. Durg expansion equipment orders for kiln and grinding units are placed.
  2. Overland conveyor belt approval is pending with the Ministry of Steel.
  3. Inorganic expansion opportunities are continuously being explored.
  4. Company is eligible for and pursuing capital incentives for the UCWL plant.
JK Lakshmi Cement Ltd (JKLAKSHMI) Concall Report Analysis & Insights | Dhanarthi