JK Lakshmi Cement Limited — Q1 FY26 earnings call

Call held 4 Aug 2025

Management summary

JK Lakshmi Cement reported a strong Q1 FY26 with a two-fold increase in net profit, driven by robust volume growth and significant price increases in the South and East. The company is actively pursuing efficiency improvements and capacity expansions, with the Durg project on track for a March 2027 completion. While North and West markets saw price weakness and premium cement contribution dipped, management remains optimistic about future pricing and market share gains.

Highlights

  • Industry volume growth observed at 5-6%, with management confident of outperforming this.

  • Good price increases seen in South (8-9%) and East (6-7%) regions.

  • Net profit increased two-fold on a YoY basis.

  • East region's capacity utilization is almost 100%.

  • Significant progress on efficiency improvements, renewable energy, and digital initiatives.

Concerns

  • North and West regions did not experience significant price increases, with West prices slipping last quarter.

  • Premium cement contribution decreased to 23% this quarter from 25% last quarter due to new market entry strategy.

  • Monsoon quarter typically presents operational challenges for using alternative fuels (AFR/RDF).

Key financials

  1. RMC Revenue ₹70 Cr
  2. Net Debt to EBITDA 1.5
  3. Premium Cement Share 23%

What they filed

Q1 FY27: revenue up 9.4%, net profit down 28.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,234 1,497 1,898 1,741 1,532 +24%1,588 +6%1,902 +0%1,905 +9%
EBITDA81 199 351 311 208 +157%205 +3%275 −22%259 −17%
Net profit-31 75 175 150 81 +361%57 −24%125 −29%108 −28%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹100 Cr this quarter · ₹1,500 Cr (FY26) planned
    • Durg expansion ₹3,000 Cr
    • Northeast land acquisition ₹70 Cr
    • Nagore and Kutch land acquisition
    • Normative maintenance CAPEX
    RMC CAPEX 1st Quarter was about Rs. 100 crores. (page 13); And when you mentioned the total project CAPEX for the next three years of around Rs.4,800 crores, and Rs.3,000 crores is being earmarked for the Durg (page 19); In Durg, the land acquisition is already there. So, Nagore and Kutch may be there. So, that may not be a very high figure, balance would go for the Northeast. (page 19); Only Rs.70 crores to Rs.80 crores? Okay. And Northeast, whatever you have just paid Rs.130-odd crores - No, we have already done of about Rs.80-90 crores on land. (page 20)
  • Debt 1.5× EBITDA
    And as we speak, we have a net debt-to-EBITDA as of now of 1.5. (page 9)
  • M&A UCWL Merger · Integrated

    Improve channel reach and volume by leveraging existing brands (Platinum Heavy Duty and Platinum Supreme) under JKLC umbrella.

    Almost 80-90% of operational synergies realized.

    I think almost all those synergies we had been doing before, right? So, I think we have realized almost of that. Maybe I would say to the extent of 80%-90%. (page 6); So, as I said in my opening address that we are going to continue with the two brands of UCWL which is Platinum Heavy Duty and Platinum Supreme. (page 10)
  • M&A Northeast Project Mines Acquisition · Pending regulatory · Consideration ₹[object Object] (cash)

    Direct access to 250 million tons of limestone reserves as 100% owner, after MDO agreement cancellation.

    Royalty rate increased to Rs. 251 per metric ton (from Rs. 105). Company will pursue recovery of Rs. 130 crores paid to erstwhile promoter.

    As we mentioned earlier, that the MDO agreement, which AMDCL had granted to Trivikram Consortium, that was cancelled, and we obviously filed a writ petition in the Assam High Court against that. But parallelly, we have been able to retrieve at least two of the three mines having limestone reserves of about 250 million tons, that has come directly as an MDO in JK Lakshmi. (page 6-7); So, ultimately, this Northeast project, which was earlier supposed to have happened in a subsidiary, Agrani and other things, will happen in JK Lakshmi as 100% owner. (page 7); Earlier, it was Rs.105 with escalation of 5% every three years, now that has come to us at a royalty of about Rs.251 per metric ton. (page 7); Okay. So, Rs.130 crores, which you had paid to the erstwhile promoter, is there anything that you need to get this recovered because now it is happening directly under JK Lakshmi? Yes, we will pursue with them. (page 7)

Guidance & targets

Volume

  • Volume Growth Volume · FY26 · High confidence Better than industry (5-6%)
    As I said before, we will do better than industry and we are well on track. So, we will deliver that, at least incremental over the industry growth, that is we are confident about.

    — Management

Capacity

  • Durg Expansion Completion Capacity · March '27 · High confidence March '27
    And on that project, we expect the first phase, which will include the clinkerization and two grinding units, one at the mother plant at Durg and another in the Madhubani, would happen by March '27, and one year later, the balance, the other two grinding units will happen. That is what we think the timeline is of now.

    — Management

  • Total Capacity Capacity · by 2030 · High confidence 30 million ton
    We have a clear-cut roadmap of 30 million ton by 2030, right.

    — Management

  • Nagore Plant Capacity Capacity · High confidence 3 million ton
    we do have a plan to set up a 3-million-ton plant out there.

    — Management

Non-Cement Revenue

  • Non-Cement Revenue Non-Cement Revenue · FY26 · High confidence Rs. 1,500 crores
    Now, as far as that non-cement is concerned, total is about Rs.144 crores what we have done with an operating margin of 4%. We are doing in the current year, it is expected to be about Rs.1,500 or so, then Rs.1,800, then again Rs.1,500, that is what -

    — Management

  • Non-Cement Revenue Non-Cement Revenue · FY27 · High confidence Rs. 1,800 crores

    — Management

  • Non-Cement Revenue Non-Cement Revenue · FY28 · High confidence Rs. 1,500 crores

    — Management

Capex

  • Total Project CAPEX Capex · Next three years · High confidence Rs. 4,800 crores
    And when you mentioned the total project CAPEX for the next three years of around Rs.4,800 crores, and Rs.3,000 crores is being earmarked for the Durg (page 19)

    — Management

Cost Reduction

  • Cost Reduction per ton Cost Reduction · Next 12-18 months · High confidence Rs. 100-120
    And sir, in terms of last time, we said in terms of the cost reduction Rs.100, 120-odd per ton for next 12 to 18 months, so, that still remains intact? That still remains intact. Yes.

    — Management

Tax Rate

  • Tax Rate Tax Rate · Subsequent quarters · High confidence 25%
    Tax, we have already switched over to the new tax regime. So, whatever profit we have going to have in the subsequent quarters, we will have to pay 25.0%-odd as per the new tax regime on that.

    — Management

Product Mix

  • Premium Cement Share Product Mix · End of this year · High confidence 27%+

    Previously 25% → 27%+

    So, our target is to reach to minimum 27%-plus premium cement. (page 16); But nevertheless, I think our plan is to take it to 27% by end of this year.

    — Management

Renewable Energy

  • Renewable Energy Portfolio Renewable Energy · This year · High confidence 52%

    Previously 49% → 52%

    Renewable, we are there at 49% now. And we do have a plan wherever we have possibility, we are enhancing that like in Gujarat and in Rajasthan, we are improving our renewable portfolio and we see that our renewable portfolio will go around 52% in this year.

    — Management

What to watch in Q2 FY26

Northeast Expansion Project Details

Next quarter
Current Exact size and project cost to be firmed up
Target Specific capacity and cost details announced

Why it matters

Crucial for understanding the scale and financial commitment for a key growth market.

Actually, we will be able to respond by next quarter the exact size which we are going to put in as part of JK Lakshmi only.

Risks & concerns

  • Regional Price Weakness

    low

    North and West regions, particularly West, experienced price slippage last quarter.

    Management acknowledged

  • Monsoon Impact on AFR/RDF Usage

    low

    Monsoon quarter is typically challenging for using alternative fuels (AFR and RDF) due to operational difficulties.

    Management acknowledged

  • Premium Cement Share Decline

    low

    Premium cement contribution dropped to 23% from 25% due to entry into new markets with base products.

    Management acknowledged

  • Northeast Project Procedural Delays

    low

    The Northeast project is experiencing procedural delays, though major approvals are in place.

    Management acknowledged

Q&A highlights

8 direct
Volume Growth and Regional Contribution Direct
Yes, yes, Amit, you are right. So, I think, yes, as I told in the last call also that some of the areas where we are going to be there in future, so we have started seeding those markets. So, yes, volume has come from those areas, those markets, and you would have noticed that our lead also has gone up to an extent.

Clarifies the drivers of volume growth, indicating successful penetration into new markets and strategic lead distance management.

Asked by Amit Murarka

Durg Expansion Equipment Ordering Direct
Durg plant expansion, we hope to start placing the order from the current quarter.

Provides a timeline for a key step in the Durg expansion project, indicating progress towards the March '27 completion target.

Asked by Amit Murarka

UCWL Merger Synergy Realization Direct
I think almost all those synergies we had been doing before, right? So, I think we have realized almost of that. Maybe I would say to the extent of 80%-90%.

Indicates significant progress in integrating UCWL and realizing operational benefits, contributing to improved performance.

Asked by Vishal Dudhwala

Northeast Project Status and Cost Implications Direct
But parallelly, we have been able to retrieve at least two of the three mines having limestone reserves of about 250 million tons, that has come directly as an MDO in JK Lakshmi. ... Earlier, it was Rs.105 with escalation of 5% every three years, now that has come to us at a royalty of about Rs.251 per metric ton.

Details the resolution of the MDO agreement cancellation, securing limestone reserves directly, and the impact of increased royalty rates on project economics.

Asked by Rajesh Ravi

Operating Cost Differences between North and East Direct
So, I think only difference is in North we do use fuel, it is imported, like particularly pet coke and coal, right? But in case of East, we have that some linkage coal with us, right? And more so, we are dependent on about close to 80% of renewable energy. So, that is what the difference is.

Explains the structural reasons behind regional cost variations, highlighting the company's focus on renewable energy in the East.

Asked by Ritesh Shah

Leverage Profile and Southern India Asset Exploration Direct
And as we speak, we have a net debt-to-EBITDA as of now of 1.5. Generally, our endeavor is to keep it below three. But when we do go for the expansion as we are doing, at the time when we are nearing the expansion, the debt comes on the balance sheet, whereas the commensurative EBITDA follows one year, two years later based on the ramp-up which we are able to do from that expansion.

Provides insight into the company's debt management philosophy and acknowledges potential temporary increases in leverage during expansion phases.

Asked by Ritesh Shah

Nagore Plant Land Acquisition Progress Direct
So, Nagore, we have two mining lease licenses. In one, I think we are almost through with all those approvals, right. ... Plant land, we have already identified the place and part of land acquisition we have already done, right?

Updates on the progress of a critical greenfield expansion project in the North, addressing analyst concerns about competitor aggression and delays.

Asked by Kamlesh Bagmar

Pan India Player Ambition Direct
We evaluate various opportunities, and size has to make sense to us because strategically as of now, as you rightly said, we do not have a presence, so, it will not be a strategic fit, but we explore. yes, there are some pluses and minuses for Pan India and being concentrated in a few regions as we are today, but we always explore, and if it comes at the right price, obviously, we do not rule that out.

Clarifies the company's strategic approach to geographic expansion, indicating a cautious but open stance towards becoming a Pan India player.

Asked by Rajesh Ravi

3 min read 7 chapters

Detailed narrative

Q1 FY26 Performance and Market Dynamics

JK Lakshmi Cement reported a strong Q1 FY26 with a two-fold increase in net profit year-on-year. The industry saw volume growth of 5-6%, which the company aims to surpass. Pricing was robust in the South, increasing by 8-9%, and in the East, up by 6-7%. However, North and West regions experienced weaker price growth, with West prices even slipping last quarter. The East region demonstrated strong operational performance with almost 100% capacity utilization.

Efficiency and Cost Optimization Initiatives

The company is intensely focused on improving efficiency across its value chain to enhance EBITDA per ton. Key initiatives include increasing renewable energy usage, targeting 52% this year from 49%, and improving the Thermal Substitution Rate (TSR). Digital transformation efforts, particularly on the manufacturing front, are expected to drive further efficiencies. Management also aims for a cost reduction of Rs. 100-120 per ton over the next 12-18 months through these measures.

Capacity Expansion and Project Timelines

JK Lakshmi Cement has ambitious expansion plans, with a total project CAPEX of approximately Rs. 4,800 crores over the next three years. The Durg expansion, estimated at Rs. 3,000 crores, is a major focus, with equipment ordering expected to commence in the current quarter and the first phase (clinkerization and two grinding units) targeted for completion by March 2027. The Surat grinding unit is also slated for commissioning in the ongoing quarter. Additionally, the company is pursuing land acquisition for new plants in Nagore and Kutch, and the Northeast project is progressing despite initial MDO agreement cancellations.

UCWL Merger Integration and Brand Strategy

The integration of UCWL is largely complete, with 80-90% of operational synergies already realized. JK Lakshmi Cement plans to continue with the Platinum Heavy Duty and Platinum Supreme brands, leveraging them to expand channel reach and volume. This strategy aims to capitalize on the established market acceptance of these brands under the JKLC umbrella, enhancing the company's overall market presence.

Capital Allocation and Debt Management

The company maintains a net debt-to-EBITDA ratio of 1.5, with a general target to keep it below 3. To fund its expansion plans, the company may take on an additional Rs. 1,000 crores in debt this year. Management acknowledges that leverage might temporarily exceed the target during peak expansion phases but emphasizes a clear roadmap for tapering it down. The Q1 FY26 CAPEX was Rs. 100 crores, with RMC revenue contributing Rs. 70 crores.

Product Mix and Pricing Outlook

The premium cement share for Q1 FY26 stood at 23%, a slight decrease from 25% in the previous quarter. This dip is attributed to the company's strategy of seeding new markets with base products to establish a foothold. However, management aims to increase the premium cement contribution to over 27% by the end of the year. Despite recent price slips in the West, the overall pricing outlook is positive, with expectations of an upward trend going forward after the monsoon season.

Northeast Project Development

Following the cancellation of the MDO agreement, JK Lakshmi Cement has successfully retrieved direct access to two mines with approximately 250 million tons of limestone reserves, now as a 100% owner. The royalty rate for these mines has increased to Rs. 251 per metric ton from the previous Rs. 105. The company intends to pursue the recovery of Rs. 130 crores previously paid to the erstwhile promoter. The exact size and project cost for the Northeast expansion are expected to be finalized by the next quarter.

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