Target: ₹7,000
CMP: ₹5,311.30
JK Cement reported Q4FY26 consolidated revenue and EBITDA of ₹3,887.5 crore (+8.6 per cent year on year) and ₹682.5 crore (-10.8 per cent) vs CIE estimate of₹4,010.4 crore and ₹690.1 crore, respectively.
The management has guided FY27E capex at ₹3,000-4,000 crore, followed by ₹1,500-2,000 crore in FY28E, reflecting continued focus on capacity expansion and operational strengthening. The company expects strong double-digit growth in grey cement volumes in FY27E.
The management indicated that Q1FY27 profitability is likely to remain broadly in line with the Q4FY26 level. However, the margin in Q2FY27 could face pressure if cement price hikes are insufficient to fully offset the potential increase in diesel cost.
Fuel cost is likely to rise by nearly ₹150-200/tonne, although the management indicated that the situation remains dynamic, with fuel orders secured until September.
The management increased the price of white cement and wall putty to offset the higher input cost, particularly the sharp rise in chemical prices. However, the possibility of passing on any further diesel-led cost inflation remains uncertain.
We maintain our Buy rating on JK Cement while revising our target price downwards to ₹7,000/share. We anticipate EBITDA to expand at a CAGR of 16.8 per cent over FY26-29E, driven by healthy volume growth and realisation growth. We derive our one-year forward target price by assigning an EV/CE multiple of 3.5x to FY28E estimates.