J K Cements

J K Cements reported a strong Q1 FY26 with net sales growing 19% year-on-year to ₹3,028 crores, although experiencing a 6% sequential de-growth. EBITDA increased by 41% year-on-year to ₹674 crores, but dipped 9% quarter-on-quarter. The EBITDA margin stood at 22.3% for the quarter, an improvement from 18.7% year-on-year but a slight decline from 22.8% in the previous quarter. Per ton EBITDA was ₹1,247, up from ₹1,014 year-on-year.

The company completed de-bottlenecking at its Ujjain unit, increasing consolidated grey cement capacity to 25.26 million tons. The 6 million tons greenfield and brownfield expansion projects, including an integrated unit at Panna (4 million tons clinkerization) and grinding locations at Panna, Hamirpur, Prayagraj, and Buxar, are on track for completion by the end of the calendar year. Additionally, the board approved a 6 lakh tons putty expansion in Rajasthan with a capital outlay of ₹195 crores to meet growing demand.

Power and fuel costs increased during the quarter, primarily due to higher pet coke prices and a balanced clinker production strategy. Freight costs also saw a marginal increase of ₹5-6 per ton due to extended lead distances for new markets like Bihar. White cement margins, after a sequential decline, have now stagnated in the 15-20% range. Management expects Q2 to be challenging with higher marketing spends and scheduled kiln maintenance impacting expenses.

Grey cement volume growth of 15% year-on-year was significantly driven by Central India, which saw over 50% growth, and the South region, albeit from a lower base. The North region experienced some de-growth due to market conditions. Management noted that cement realizations were flat on average, with increases in the South compensating for marginal pressure in North and Central regions. The company is actively expanding its dealer network in Central India and entering new markets like Bihar to support upcoming capacities.

Gross debt as of June 30, 2025, stood at ₹5,203 crores, with net debt at ₹2,796 crores. The net debt to EBITDA ratio was 1.29, slightly lower than 1.30 in the previous quarter, and management aims to keep it below 2. Capex for FY26 is projected to be around ₹2,000 crores, with FY27 capex for normal and putty expansion estimated at ₹600 crores. The company is considering a more continuous approach to project execution, potentially undertaking two projects simultaneously to achieve its 50 million tons capacity target by 2030.

The company booked ₹85 crores in incentives for the quarter, primarily from Nimbahera Line 3 (expiring this fiscal) and three grinding locations (Aligarh, Hamirpur, Prayagraj). Total incentives of approximately ₹300 crores are expected over the next 3-5 years. The green power capacity is currently 184 megawatts, and the company aims to increase its green power share to closer to 60% by the end of FY26, contributing to cost savings of ₹40-50 per ton for the fiscal year.