This article first appeared on GuruFocus .
Release Date: November 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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JK Lakshmi Cement Ltd ( BOM:500380 ) expects demand and pricing to improve post-Diwali, with price hikes of INR10 in October, INR10 in November, and INR15 in December, aiding margin recovery.
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The company is on track to achieve its FY27 volume growth target of 7-8%, matching industry growth, despite a monsoon-impacted Q2.
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Expansion projects at Durg, Madhubani, and Prayagraj are progressing well, with 50% civil work completed at Durg and all projects on track for completion by March 2028.
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Cost reduction initiatives include increasing renewable energy share (currently 48%, expected to reach 49%) and reducing specific power consumption, which will lower operating costs.
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JK Lakshmi Cement Ltd ( BOM:500380 ) maintains a disciplined approach to capital allocation, capping net debt to EBITDA at 3.5x and prioritizing balance sheet strength over aggressive expansion.
Negative Points
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Fuel costs are expected to rise further, with pet coke cost projected at INR2,000-2,200 per 1,000 kcal in Q3/Q4, up from INR1,820 in Q2, pressuring margins.
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Q2 EBITDA per ton declined to INR517 from INR732, reflecting weak realizations and cost inflation, with the company needing significant price recovery to return to previous levels.
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Volume growth in Q2 was only 5%, lagging the industry growth of 9-10%, due to heavy monsoon impact in key markets of Gujarat and Chhattisgarh.
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Blended power cost increased to INR6.24 per unit in Q2 from INR5.52 in Q1, adding to cost pressures.
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The company has revised its capacity target downward to 25 million tons by FY30 from 30 million tons, indicating a slower growth trajectory to avoid over-leveraging.
Q & A Highlights
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Q: What is the fuel cost outlook for Q3 and Q4 FY27, and how much further inflation is expected? A: The company representative stated that fuel cost rose to INR1.82 per 1,000 kcal in Q2 from INR1.54 previously. For Q3, it is expected to touch around INR2.0 or slightly above, and for Q4, it could rise to INR2.152.2 if the current volatile situation persists. Mitigation efforts include changing the fuel mix at the North plants (Sirodi and Udaipur), though there are limits due to ash and sulfur content. Domestic coal prices are also rising sharply, with recent auction prices up over 200%.
Q: What is the pricing and demand outlook, especially after the recent price hikes in September and October? A: The company representative noted that prices have moved up from late September, particularly in the non-trade segment, and October saw increases in both trade and non-trade. Post-Diwali, demand is expected to improve with no major festivities or rains, and prices are expected to inch up further. The representative expects to recover part of the cost increase from the market, citing historical H2 trends of better demand and prices.
Q: What is the current status and timeline of the Durg expansion and other capacity expansion projects? A: The company representative provided an update: At Durg (2.3 MTPA clinker and 1.6 MTPA cement), over 50% of civil work is complete, 2025% fabrication done, and the project is on track for completion by March 2028. At Madhubani, Bihar, 80% of piling is complete. At Prayagraj, all clearances are in place and contractors are mobilized. All three projects are progressing concurrently and targeted for completion by March 2028. The Patratu project has been moved to Medinipur, West Bengal, due to land acquisition delays under the Chotanagpur Tenancy Act, and Medinipur offers quicker execution and synergy with clinker from the Northeast.
Q: What is the CapEx guidance for FY27 and FY28, and how much has been spent on Durg so far? A: The CFO stated that the company has spent about INR400 crore on Durg in H1 FY27 (INR200 crore in Q2 and INR200 crore in Q1), and approximately INR600650 crore in total on the project so far. The overall CapEx guidance remains INR1,500 crore for FY27 and about INR2,000 crore for each of the next two years. Of the FY27 CapEx, about INR1,000 crore will go to Durg, with the remainder for land acquisition at Kharach Nagar, the Northeast project, and normal maintenance CapEx.
Q: What is the volume growth target for H2 FY27, given that Q2 volume growth was only 5% versus industry growth of 910%? A: The company representative explained that H1 volume growth was about 7%, with Q2 at 5%, impacted by severe monsoon in key geographies of Gujarat, Rajasthan, and Chhattisgarh. The company is confident of matching industry growth of 78% in the coming six months.
Q: What is the net debt and net debt-to-EBITDA outlook? A: The CFO stated that the company will ensure net debt-to-EBITDA does not cross 3.5x going forward. Net debt is expected to peak at around INR2.5 crore by the end of FY27, with working capital release expected in H2.
Q: What is the strategy to narrow the realization gap versus the market leader, UltraTech, which is around INR300 per ton? A: The company representative acknowledged the gap is higher in some North markets but has been reduced in East and West Gujarat. Key actions include improving the premium product mix (IJSM) and selling more premium products to anchor mother product pricing. The company is consolidating its position in core markets rather than spreading thin.
Q: What is the status of the Northeast expansion, including commissioning timeline, CapEx, and competitive landscape? A: The company representative stated that the Northeast plant is targeted for commissioning around March 2029, with a CapEx of about INR1,800 crore. The company has four mines in the Northeast and is optimistic about its strategy. On competition, the representative noted that North is a supplier market, and future capacity additions will be in limestone-rich areas like Rajasthan, Chhattisgarh, Andhra, and the Northeast. The company is consolidating in North, East, and West rather than spreading thin. The Northeast could become a supply point for East India (North Bengal, Bihar) in 710 years.
Q: What is the trade vs. non-trade mix strategy, and what is the premium product share target? A: The company representative stated that the trade share will remain around 5859%, as trade is a consistent long-term channel, even though non-trade is currently more remunerative in some markets. The premium product share is currently 27% and is expected to remain around 2728%, with efforts to reach 30%.
Q: What are the cost improvement drivers expected in Q3 and Q4 FY27? A: The company representative cited several positive factors: renewable energy ramp-up (solar output improves post-monsoon), lower power costs due to completion of shutdowns, lower specific power consumption, and operating leverage. A new captive solar plant (40 MW at Udaipur, 2025 MW at Durg, 40 MW at CDOE) will partially contribute from Q4 FY27. Green energy share is expected to inch up from 48% to 49%.
Q: What is the rationale for revising the capacity target from 30 MTPA to 25 MTPA by FY30? A: The CFO explained that the company tapered the pace of expansion to maintain financial discipline and ensure net debt-to-EBITDA does not cross 3.5x. Maintaining leverage discipline is more important than merely reaching a 30 MTPA figure by FY30.
Q: What is the status of the INR130 crore receivable that moved from current to non-current assets, and has any provision been made? <
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
