JK Lakshmi Cement Limited — Q2 FY26 earnings call

Call held 7 Nov 2025

Management summary

JK Lakshmi Cement reported a Q2 FY26 with improved sales mix, higher premium product proportion, and better volume growth than the industry. Non-cement revenue increased to Rs. 153 crores, though with a low 4% EBITDA margin. The company is progressing on its Durg expansion with major equipment orders placed, while also facing challenges from increased power, fuel, and freight costs, and a decline in green power contribution. Receivables have also seen a significant increase.

Highlights

  • Non-cement revenue grew to Rs. 153 crores, up from Rs. 144 crores in the previous quarter.

  • Sales proportion in the North region improved to 69%.

  • Premium product proportion increased by 3% to 26% of real volume.

  • Commissioning of Surat grinding station led to increased volume in Gujarat, a better realization market.

  • Orders for all major long delivery items for the Durg Brownfield expansion have been placed.

  • Management expects volume growth to be higher than the industry average in the coming quarters.

Concerns

  • EBITDA margin for non-cement revenue was low at 4%.

  • Green power proportion decreased to 46% from 53% due to plant shutdowns and weather conditions.

  • Power and fuel costs, as well as freight costs, saw an increase QoQ, with freight costs jumping 8-8.5% per ton.

  • Receivables have nearly doubled from March to the current period.

  • Approval for the overland conveyor belt project is still pending with the Ministry of Steel.

Key financials

  1. Non-cement Revenue ₹153 Cr
  2. Non-cement EBITDA Margin 4%
  3. RMC Revenue ₹72 Cr
  4. AC Revenue ₹52 Cr
  5. Premium Product Proportion 26%
  6. Green Power Proportion 46%
  7. Lead Distance 395 kilometer
  8. Blended Cement Proportion 62%
  9. Trade Sales Proportion 53%
  10. Clinker Factor (TKL) 1.54

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 ₹50 Cr this quarter · ₹1,000 Cr (FY26) planned
    • Durg Brownfield expansion ₹3,000 Cr
    • Maintenance CAPEX, small land acquisition, equipment ordering, North-East land acquisition ₹1,200 Cr
    Project, right now we are talking of, we have zeroed it only on the Durg Brownfield expansion, which is costing about Rs. 3,000 crores. We have not yet formed up on the Greenfield for Nagaur, Kutch and Assam. ... Yes, we are talking of that only, Rs. 50-odd crores only has been spent. Rest will come in the remaining part of the current year and next two years. ... Okay, so total we are saying Rs. 1,500 crore, Rs. 1,000 crores to Rs. 1,200 crores for this year and next Rs. 1,300 crores to Rs. 1,500 crores and even for FY '28 also. So, then, we are not even factoring the CAPEX for whether the Nagaur or Kutch or Assam? ... So, you can see, I have talked of over the next two years that is Rs. 3,000 crores, Rs. 1,000 crores to Rs. 1,200 in the current year that is Rs. 4,200 crores. Out of that Rs. 3,000 crores goes for Durg, so remaining Rs. 1,200 crores is for maintenance CAPEX and other small land acquisition, some ordering of equipment, even some land acquisition in North-East and all that. But majority of that expenditure will flow in '29 and '30.
  • Debt Debt disclosed
    Yes, but broadly, we will not be crossing three times net debt-to-EBITDA, even whatever the odd, there is a possibility if that is likely to happen, maybe FY ‘30 could be FY ‘31 also possible.

Guidance & targets

Capacity

  • Total Capacity Capacity · by FY30 · High confidence 30 million tons
    So, that is how we are going to reach 30 million by FY '30.

    — Management

  • Durg Brownfield Expansion Capacity Capacity · by FY28 · High confidence 22.6 million tons
    From here, our journey with the Durg Brownfield expansion will take us to 22.6 by FY '28.

    — Management

  • Greenfield Plants Capacity (Nagaur, Kutch) Capacity · FY29 and FY30 · High confidence 3 million tons each
    From there, we have three Greenfield plants, Nagaur, Kutch and Assam, they will come in FY '29 and FY '30 for about 3 million each for Nagaur and Kutch and maybe about 2 to 2.5 we have not yet found out the size of Assam, but in that region.

    — Management

  • Durg Grinding Unit Commissioning Capacity · March 27 · High confidence March 2027
    For the Durg grinding unit. Yes.

    — Management

  • Durg Grinding Unit (one of two) Commissioning Capacity · March 27 · High confidence March 2027
    And I think even now, I think one more grinding unit, I think is targeted by March. Yes, we have clubbed and one of the two. Yes, you are right.

    — Management

  • Durg Grinding Units (total) Capacity · by March '27 · High confidence 2.2 million tons
    Yes, broadly, we are talking of 2.2 by March '27 and balance by March '28.

    — Management

  • Nagaur and Kutch Clinker Capacity Capacity · High confidence 2 million tons
    Sorry, sir, are you saying a clinker will be a 2 million ton? Yes, for Nagaur and Kutch, 2 million clinkers and 3 million cements.

    — Management

  • Nagaur and Kutch Cement Capacity Capacity · High confidence 3 million tons
    Yes, for Nagaur and Kutch, 2 million clinkers and 3 million cements.

    — Management

Capex

  • Durg Brownfield Expansion Cost Capex · High confidence Rs. 3,000 crores
    Project, right now we are talking of, we have zeroed it only on the Durg Brownfield expansion, which is costing about Rs. 3,000 crores.

    — Management

  • FY26 Capex Capex · current year (FY26) · High confidence Rs. 1,000 to Rs. 1,200 crores
    Yes, we are talking of about Rs. 1,000 to Rs. 1,200 crores in the current year, full year.

    — Management

  • Annual Capex (FY27-FY28) Capex · next two years (FY27-FY28) · High confidence Rs. 1,300 to Rs. 1,500 crores per annum
    And maybe Rs. 13 crores to Rs. 15 crores over the next two years. ... Rs. 1,300 crores to Rs. 1,500 crores per annum you mean next two years? Yes.

    — Management

  • Greenfield Capex per ton Capex · by 2030 · High confidence $100 per ton
    Okay. But in terms of if you look at the other companies, so around $80 to $90 plus kind of power would be there for Greenfield, 4 million per ton basis, if one has to look at being a Greenfield, it will be closer to $100 per ton? Since it is going to come by 2030, so it will be closer to $100 only. I am not counting on the capital cost of other companies. But that means that taking into account the inflation for next four years - five years, at least $100 would be there.

    — Management

Cost Savings

  • Cost Savings Cost Savings · 18 months to 24 months · High confidence at least Rs. 120
    I think we are working on that and we will continue to work on that and whatever we have promised that 18 months to 24 months' time we are going to have at least Rs. 120 of savings. So, that we will definitely have and we are on the track and one of the things which I just mentioned was premium product has moved from 23% to 26%. We are going to take it further.

    — Management

Volume Growth

  • Volume Growth vs. Industry Volume Growth · coming two quarters · Medium confidence higher than industry
    So, what I said last time, I think our growth is going to be little higher than the industry, so that I still maintain. ... So, with a reasonable kind of you know assumptions, I do believe that we will do better than industry in the coming two quarters as well.

    — Management

Debt

  • Net Debt-to-EBITDA Debt · High confidence not crossing three times
    Yes, but broadly, we will not be crossing three times net debt-to-EBITDA, even whatever the odd, there is a possibility if that is likely to happen, maybe FY ‘30 could be FY ‘31 also possible.

    — Management

What to watch in Q3 FY26

Durg Brownfield Expansion Progress

next quarter
Current Major long delivery items ordered, Rs. 50 crores spent till Sep 2025
Target Further progress on construction and capex spend

Why it matters

Key capacity expansion project, tracking execution and capex deployment is crucial for future growth.

Yes, you are right. You had asked this question earlier also and we had confirmed that we will confirm to you in the next quarter. We are happy to inform that the orders for all the major long delivery items have been placed. ... Yes, we are talking of that only, Rs. 50-odd crores only has been spent. Rest will come in the remaining part of the current year and next two years.

Risks & concerns

  • Low EBITDA margin for non-cement business

    medium

    Non-cement revenue had an EBITDA margin of only 4%.

    Analyst acknowledged

  • Decline in green power proportion

    medium

    Green power proportion dropped to 46% from 53% due to plant shutdowns and weather, impacting power and fuel costs.

    Management acknowledged

  • Increase in power and fuel costs

    medium

    Power and fuel costs saw an inch up QoQ, partly due to lower green power contribution and higher Petcoke prices ($116-$120/ton).

    Management acknowledged

  • Increase in freight costs

    medium

    Freight costs per ton jumped by 8-8.5% QoQ.

    Management acknowledged

  • Doubling of receivables

    medium

    Receivables have nearly doubled from March to the current period, though management stated it's normal.

    Analyst acknowledged

  • Delay in overland conveyor belt approval

    medium

    Approval for the right of way for the overhead conveyor belt is pending with the Ministry of Steel, causing project delays.

    Management acknowledged

  • Industry EBITDA/ton below Rs. 1,000

    medium

    The entire industry's EBITDA/ton is currently less than Rs. 1,000, making it challenging to achieve higher profitability targets.

    Management acknowledged

Q&A highlights

7 direct
Durg expansion status and equipment orders Direct
Yes, you are right. You had asked this question earlier also and we had confirmed that we will confirm to you in the next quarter. We are happy to inform that the orders for all the major long delivery items have been placed.

Confirms significant progress on a key brownfield expansion project, indicating execution is on track.

Asked by Amit Murarka

CAPEX spend for Durg expansion Direct
Yes, we are talking of that only, Rs. 50-odd crores only has been spent. Rest will come in the remaining part of the current year and next two years.

Clarifies the initial spend on the Rs. 3,000 crore Durg project, indicating that the majority of the capex is back-ended.

Asked by Shravan Shah

Cost savings target and progress Direct
I think we are working on that and we will continue to work on that and whatever we have promised that 18 months to 24 months' time we are going to have at least Rs. 120 of savings. So, that we will definitely have and we are on the track and one of the things which I just mentioned was premium product has moved from 23% to 26%. We are going to take it further.

Reaffirms commitment to the Rs. 120 cost savings target and links it to ongoing initiatives like premium product growth.

Asked by Shravan Shah

Geographical mix change and impact on realization Direct
Amit, you are absolutely right and as I mentioned that is occasional move which we take just to improve a little bit of our utilization.

Confirms that changes in geographical mix were a deliberate, temporary strategy to improve realization and utilization, implying it might revert post-monsoon.

Asked by Amit Murarka

Overland conveyor belt project status Direct
Right of way approval is now pending with Ministry of Steel. Board of Steel Authority of India has already approved. We are now trying to get approval from Ministry of Steel, which may happen you know in coming days and months.

Provides an update on a critical infrastructure project, highlighting the regulatory hurdle and uncertainty around its timeline.

Asked by Amit Murarka

Inorganic expansion plans Direct
Yes, we keep exploring that. So, that is a continuous exercise, provided that comes at the right valuation and right location and makes strategic sense for us. So, no update further on that other than what we have been routinely doing quarter-after-quarter.

Indicates ongoing strategic interest in M&A without specific deals, suggesting potential future growth avenues.

Asked by Ritesh Dhoot

Impact of ground-level discipline on realization Direct
Absolutely, I think you are right, Vaibhav. I think this ground level discipline, having less conflict between channels like multi-role channel partners, that we have already started working on. I would not say those things have completed or accomplished. We have started working on that and that is also benefiting us in many ways. One, of course, improving our price positioning and price perception in the market. Second, also further improving our efficiency of supply chain.

Acknowledges the positive impact of internal efforts on price positioning, perception, and supply chain efficiency, which contributes to better realization.

Asked by Vaibhav Agarwal

2 min read 6 chapters

Detailed narrative

Capacity Expansion and Long-Term Growth Strategy

JK Lakshmi Cement is targeting a total capacity of 30 million tons by FY30. This includes the Durg Brownfield expansion, which will increase capacity to 22.6 million tons by FY28 at a cost of Rs. 3,000 crores. Major long delivery items for Durg have been ordered, with Rs. 50 crores already spent. Additionally, three greenfield plants in Nagaur, Kutch, and Assam are planned for FY29-FY30, with Nagaur and Kutch each adding 3 million tons of cement capacity (2 million tons clinker). The company anticipates a greenfield capex of around $100 per ton by 2030.

Operational Efficiency and Cost Management Initiatives

The company is actively working on various levers to improve performance, including enhancing premium product proportion, reducing distribution costs, and improving plant efficiency. Management reiterated its target of achieving at least Rs. 120 in cost savings within 18-24 months and confirmed being on track. The premium product proportion has already increased from 23% to 26% QoQ, driven by new brands like Green Plus. The company is also exploring technology, AI, and digital algorithms for process optimization.

Sales Mix and Realization Dynamics

In Q2 FY26, the company saw an improved blended realization partly due to a shift in geographical mix, with North sales (including Gujarat) increasing to 69% of total sales. The premium product proportion also rose to 26%. The commissioning of the Surat grinding station contributed to higher volumes in Gujarat, a market with better realization. While trade prices remained largely intact, non-trade prices saw a decline, which management attributes to passing on benefits to customers and expects to normalize with improved demand.

Green Power and Fuel Cost Trends

The green power proportion decreased to 46% in Q2 FY26, down from 53% in the previous quarter. This decline was primarily due to plant shutdowns and adverse weather conditions affecting WHRS production and solar generation, leading to an increase in power and fuel costs. Petcoke prices were noted to be in the range of $116-$120 per ton. Management expects green power contribution to improve in the current quarter with better WHRS generation and solar availability.

Overland Conveyor Belt Project Update

The critical overland conveyor belt project, aimed at improving logistics efficiency, is facing delays. While the sale board has approved the leasing of land and right of way, final approval is pending with the Ministry of Steel. Management is actively pursuing this approval but acknowledges the difficulty in providing a definitive timeline due to external dependencies.

Financial Outlays and Leverage

The total capex for FY26 is projected to be between Rs. 1,000 and Rs. 1,200 crores, with Rs. 50 crores already spent on the Durg expansion till September. For the subsequent two years (FY27-FY28), annual capex is estimated at Rs. 1,300 to Rs. 1,500 crores. The company aims to maintain its net debt-to-EBITDA ratio below three times, even with aggressive expansion plans. Receivables have nearly doubled from March, which management considers a normal fluctuation.

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