JK Lakshmi Cement Limited — Q3 FY26 earnings call

Call held 4 Feb 2026

Management summary

JK Lakshmi Cement faced a challenging Q3 FY26 with a 9% sequential decline in realizations, primarily due to non-trade price drops and market volatility. Despite this, the company progressed on its Durg Line-2 expansion, spending ₹250-260 crores in the quarter, and saw efficiency gains in power costs. Management anticipates a recovery in pricing and double-digit demand growth in Q4 FY26, while working to improve margins in its non-cement business and address project delays.

Highlights

  • Commissioned Surat grinding station in September 2025, increasing non-trade volume.

  • Power cost reduced to ₹5.37 per unit, reflecting efficiency improvements.

  • Durg Line-2 project progressing with ₹250-260 crores spent in Q3 FY26, total FY26 capex target of ₹650 crores.

  • Expectation of improved trade and non-trade realizations in Q4 FY26, with non-trade prices already up ₹10-15 in January.

  • Targeting an increase in blended cement (PPC) ratio from 62% to 67%.

Concerns

  • Sharp sequential decline of 9% in overall realization for Q3 FY26.

  • Trade share declined from 53% to 49% due to focus on non-trade markets and post-GST price confusion.

  • Non-cement business operating at a low ~4% EBITDA margin, with parity to cement margins targeted in 2 years.

  • Conveyor belt project for Durg Line-2 is stalled due to land issues, impacting overall project efficiency.

  • Employee expenses reported at ~₹160 crores, with management's previous 'endeavour' to keep it in ₹120-150 crores range.

Key financials

  1. Clinker Sales Q3 FY26 1,51,000 tonnes -11.7%QoQ
  2. Clinker Sales Q2 FY26 1,71,000 tonnes
  3. Clinker Sales 9M FY26 5,34,000 tonnes
  4. Clinker Sales FY25 7,23,000 tonnes
  5. Non-Cement Revenue ₹147 Cr
  6. Power Cost ₹5.37/unit
  7. Fuel Cost ₹1.56/kcal
  8. Depreciation Q3 FY26 ₹85 Cr +9%QoQ
  9. Depreciation Q2 FY26 ₹78 Cr

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.

Segment breakdown

Share of Revenue
₹270 Cr Total
  • Non-Cement Business ₹147 Cr 54.4%
  • RMC ₹67 Cr 24.8%
  • AAC Blocks ₹56 Cr 20.7%

Capital allocation

high confidence
  • Capex ₹255 Cr this quarter · ₹650 Cr (FY26) planned
    • Durg Line-2 project ₹255 Cr
    • Maintenance CAPEX ₹50 Cr
    • Conveyor belt for Durg Line-2 (stalled) ₹170 Cr
    Basically, in Durg Line-2, we have not incurred much of the CAPEX other than what we had mentioned in the last call. So, in the first 9 months of the current financial year, we have incurred about 250-260 crores, we have incurred. Balance will happen in the, we have talked of a figure of about close to 400 in the current financial year of the Durg project. So, balance will happen in the current quarter. (Page 5-7) | No, maintenance of us is not 200. It's totally 50 crores in a year. (Page 16) | We had included some expenditure on the conveyor belt also therein. Otherwise, it is Rs. 3,000 crores only. No. That is not going on. That is stalled because of this issue of the land, as we have been talking of. So, that includes the expenditure already incurred plus the balance to be incurred, which is about Rs. 170 odd crores. (Page 18)
  • Debt 3.3× EBITDA
    And then in terms of the further expansion beyond this, the Nagore, Kutch and Assam, so whatever we say to reach a 30 million tons, so that stand remains same. And in terms of the net debt to EBITDA, that 3-3.5X that we will try to maintain. (Page 17)

Guidance & targets

Capacity

  • Durg Line-2 Project Completion Capacity · by March 2028 · High confidence March 2028
    Entire project will get completed by March 28, including all the spread location.

    — Management

  • Durg Line-2 Phased Commissioning Capacity · by March 2027 and March 2028 · High confidence March 2027 (2.2 MT) and March 2028 (2.4 MT)
    Firstly, we already understood that it was planned to be commissioned into phases 2.2 by March '27 and 2.4 by March '28. So, does this season remain intact? And secondly, on the overall Durg CAPEX of Rs.3,000 crores is a number what you said earlier that still remains. That was the clarification.

    — Management

Capex

  • FY26 Total CAPEX Capex · FY26 · High confidence ₹650 crores
    No, it is about around that. You are right. Total CAPEX. 650 odd?

    — Management

  • FY27 CAPEX Capex · FY27 · High confidence ₹1,600-1,700 crores
    The next year, we are targeting anywhere between Rs. 1,600crores to 1,700 crores.

    — Management

Profitability

  • Non-Cement Business Margin Profitability · within 2 years · Medium confidence Higher single limit
    But right now, I think since all these product lines and installations are in the ramping up phase, we see that improved margin going forward. But not closer to the cement, I would not say that we will reach to the cement level, but definitely a higher single limit. That is what our effort is. It will take at least 2 years' time.

    — Management

Costs

  • Fuel Price (Pet Coke, Coal) Costs · Q4 FY26 · High confidence ₹1.58-1.60 per kcal
    Pet coke, coal prices, it's going up. I think definitely it will go up because whatever we have in stock, that we have almost exhausted. Now, new buying is also happening. It will go up by at least 1.58 to 1.60, that is what we see in our case.

    — Management

Pricing

  • Non-Trade Price Increase (Jan) Pricing · January 2026 · High confidence ₹10-15
    So, Shravan, this varies in different markets. And the range I would put is Rs. 10 to 15.

    — Management

  • Trade Price Outlook Pricing · Q4 FY26 · Medium confidence Likely to go up
    But now we are seeing that the trade prices to also go up. Likely to go up.

    — Management

Efficiency

  • Blended Cement (PPC) Ratio Efficiency · Next year · High confidence 67%

    Previously 62% → 67%

    I think our effort is to take this blended cement from 62% to about 67%. To that extent, our CC ratio will improve.

    — Management

Debt

  • Net Debt to EBITDA Debt · Ongoing · High confidence 3-3.5X
    And in terms of the further expansion beyond this, the Nagore, Kutch and Assam, so whatever we say to reach a 30 million tons, so that stand remains same. And in terms of the net debt to EBITDA, that 3-3.5X that we will try to maintain.

    — Management

Market context

  • Q4 Demand Growth Volume · Q4 FY26 · High confidence Double digit
    The Q4 being the base little higher. So, I think demand momentum is good. What we see definitely, double digit growth in Quarter 4 as well.

    — Management

What to watch in Q4 FY26

Realization Improvement

next quarter
Current 9% QOQ decline in Q3 FY26; non-trade prices up ₹10-15 in Jan
Target Continued improvement in trade and non-trade realizations

Why it matters

Realization is a core profitability driver, and its recovery is crucial after the Q3 decline.

So, pricing-wise, I see things are improving for sure. (Page 5) | So, Shravan, this varies in different markets. And the range I would put is Rs. 10 to 15. (Page 15)

Risks & concerns

  • Market Volatility and Realization Pressure

    high

    Sharp 9% QOQ decline in realization due to non-trade price drops post-GST reduction and regional market dynamics, making forward projections difficult.

    Management acknowledged

  • Conveyor Belt Project Delay

    medium

    The Durg Line-2 conveyor belt project is stalled due to land acquisition issues, impacting the overall project timeline and efficiency.

    Management acknowledged

  • Rising Fuel Costs

    medium

    Expectation of increasing pet coke and coal prices (₹1.58-1.60/kcal) will put pressure on input costs in the coming quarters.

    Management acknowledged

  • Ramping Up New Capacity

    low

    The newly commissioned Surat grinding station requires ramping up, which initially focuses on non-trade markets and can impact trade share.

    Management acknowledged

Q&A highlights

6 direct
Trade Share Decline Direct
So, trade also, if you really see, post GST reduction on 22nd September, there was some confusion in the market with respect to passing on prices to customers and things like that. In fact, prices went down quite a bit post GST reduction. So, there was a demand in non-trade segment during that point in time.

Analyst questioned the significant drop in trade share; management explained it was due to Surat plant commissioning (non-trade focus), GST impact, and labor scarcity.

Asked by Pathanjali Srinivasan

Realization Decline and Volatility Partial
So, drivers were, one, non-trade prices went down drastically post GST reduction, one. Second, in our case, because you also mentioned about peers. So, our dependence on Gujarat is a little higher. And since non-trade prices went down everywhere, including Gujarat and our trade sales was also not that great. I think 49%, that is what our trade is.

Analysts repeatedly pressed on the sharp 9% QOQ realization decline and its volatility, with management attributing it to specific regional market dynamics and non-trade price pressure.

Asked by Harshal Mehta

Durg Line-2 CAPEX and Timeline Direct
Basically, in Durg Line-2, we have not incurred much of the CAPEX other than what we had mentioned in the last call. So, in the first 9 months of the current financial year, we have incurred about 250-260 crores, we have incurred. Balance will happen in the, we have talked of a figure of about close to 400 in the current financial year of the Durg project. So, balance will happen in the current quarter.

Clarification on the current quarter's capex spend for Durg and the overall FY26 target, along with the phased commissioning timeline for the large project.

Asked by Harsh Mittal

Non-Cement Business Margin Direct
But right now, I think since all these product lines and installations are in the ramping up phase, we see that improved margin going forward. But not closer to the cement, I would not say that we will reach to the cement level, but definitely a higher single limit. That is what our effort is. It will take at least 2 years' time.

Analyst questioned the low profitability of the non-cement segment; management provided a timeline and directional target for margin improvement.

Asked by Pushkar Jain

Employee Costs Partial
So, you asked two questions. One on pricing, which I said non-trade has gone up, even trade also is expected to go. Second on employee costs, we had taken some previous projects. In fact, our endeavour is to further improve the productivity, which we are working on.

Analyst noted a sequential increase in employee costs, prompting management to clarify their focus on productivity improvements rather than direct cost cuts.

Asked by Sanjeev Singh

Fuel Cost Outlook Direct
Pet coke, coal prices, it's going up. I think definitely it will go up because whatever we have in stock, that we have almost exhausted. Now, new buying is also happening. It will go up by at least 1.58 to 1.60, that is what we see in our case.

Provided specific guidance on the expected increase in key input costs, which will impact future profitability.

Asked by Rajesh Ravi

Conveyor Belt Status Direct
No. That is not going on. That is stalled because of this issue of the land, as we have been talking of. So, that includes the expenditure already incurred plus the balance to be incurred, which is about Rs. 170 odd crores.

Confirmed an ongoing delay in a critical infrastructure project due to land issues, impacting the Durg expansion.

Asked by Amit Murarka

Trade vs Blended Share Direct
So, institutional cement is not only about OPC. Institutional cement is also about blended cement. For instance, we have started pushing. So, institutional sales, we are trying to push blended cement, that is PPC. In a lot of Ready-Mix plants, we have supplied now PPC, which was not the case before.

Clarified that a decline in trade share doesn't necessarily mean overall market share loss, as the company is strategically pushing blended cement in institutional sales.

Asked by Tushar Chaudhari

3 min read 6 chapters

Detailed narrative

Q3 FY26 Performance and Realization Challenges

JK Lakshmi Cement reported a challenging Q3 FY26, marked by a sharp 9% sequential decline in overall realization. This was primarily attributed to a significant drop in non-trade prices following the GST reduction in September 2025, coupled with labor scarcity during the Diwali season and state elections. The company's trade share consequently decreased from 53% to 49%, as its newly commissioned Surat grinding station primarily caters to the non-trade heavy Gujarat market. Despite these headwinds, management expects a recovery in both trade and non-trade prices in Q4 FY26, with non-trade prices already showing an increase of ₹10-15 per unit in January.

Capacity Expansion and Capex Progress

The Durg Line-2 expansion project remains a key focus, with approximately ₹250-260 crores spent in Q3 FY26. The total capex for FY26 is projected to be around ₹650 crores, with a more substantial outlay of ₹1,600-1,700 crores targeted for FY27. The entire Durg project, including the conveyor belt component, is estimated at ₹3,000 crores and is slated for completion by March 2028, with phased commissioning of 2.2 MT by March 2027 and 2.4 MT by March 2028. Maintenance capex is maintained at ₹50 crores annually.

Cost Management and Productivity Initiatives

The company demonstrated efficiency gains in power costs, which decreased sequentially from ₹5.52 to ₹5.37 per unit. Fuel costs, specifically pet coke and coal, were reported at ₹1.56 per kilocalorie, but management anticipates an increase to ₹1.58-1.60 per kilocalorie in Q4 FY26, which will exert pressure on input costs. Employee expenses were noted at approximately ₹160 crores in Q3 FY26, with management emphasizing ongoing efforts to improve productivity across operations to stabilize these costs.

Non-Cement Business Development

The non-cement business contributed ₹147 crores to revenue in Q3 FY26, with Ready Mix Concrete (RMC) accounting for ₹67 crores and AAC blocks for ₹56 crores. This segment currently operates at a low EBITDA margin of around 4%. Management is actively working on enhancing productivity and focusing on value-added products within this segment. The strategic goal is to achieve a 'higher single limit' margin for the non-cement business within the next two years, although it is not expected to reach parity with cement margins.

Market Outlook and Strategic Focus

Looking ahead, JK Lakshmi Cement projects double-digit demand growth for Q4 FY26, which is expected to outpace the industry's estimated 7-8% growth. The company is strategically increasing its blended cement (PPC) ratio from 62% to 67% to optimize its clinker consumption ratio. Despite acknowledging market volatility, management expressed confidence in improving pricing trends due to a combination of stronger demand and rising input costs. The company also aims to maintain its net debt to EBITDA ratio within the 3-3.5X range.

Conveyor Belt Project Delay

A significant concern highlighted was the stalled conveyor belt project for the Durg Line-2 expansion. This project, with an estimated expenditure of approximately ₹170 crores, is currently on hold due to unresolved land acquisition issues. The delay impacts the overall project timeline and could affect the operational efficiency of the Durg plant once commissioned. Management confirmed that this stalled component is included in the total Durg CAPEX figures.

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