J.K. Cement Limited (JKCEMENT.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the JK Cement earnings conference call for the quarter and half year ended 30th September 2025, hosted by PhillipCapital (India) Private Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital. Thank you, and over to you, sir.

Thank you, Davin. Good evening, everyone. On behalf of PhillipCapital (India) Private Limited, we welcome you to the Q2 and H1 FY '26 call of JK Cement Limited. On the call, we have with us Mr. Ajay Kumar Saraogi, Deputy Managing Director and CFO; and Mr. Prashant Seth, President, Business Information and Investor Relations at JK Cement. I would like to mention on behalf of JK Cement Limited and its management that certain statements that may be made or discussed on today's conference call may be forward-looking statements related to future business developments and statements which are based on current management expectations. These statements are subject to a number of risks, uncertainties, and other important factors which may cause actual developments and results to differ materially from the statements made. JK Cement Limited and the management of the company assumes no obligation to publicly alter or update these forward-looking statements, whether as a result of new information or future events or otherwise. I will now hand over the floor to the management of JK Cement for their opening remarks, which will be followed by interactive Q&A. Thank you and over to you, Saraogi sir.

Thank you, Vaibhav. Good evening. And welcome to Q2 call. The Board of Directors met on 1st of November to review the working of the company for the half year ended 30th September and also to review the performance for the second quarter. The major highlights, the revenue from operations during this quarter was INR 2,859 crores as against INR 2,410 crores previous year, an increase of 19%, though it was lower by 10% as compared to previous quarter, which was -- the number of previous quarter was INR 3,190 crores. For the 6-month period, the revenue from operations were higher by 19% at INR 6,049 crores as against INR 5,070 crores. The EBITDA during this quarter was INR 440 crores as compared to INR 271 crores last year and INR 673 crores in the previous quarter. For the half year period, the EBITDA was INR 1,113 crores as compared to INR 746 crores, an increase of 49%. The comparative EBITDA margins for this quarter was 15.9%. Last year, it was 11.5%. Previous quarter, it was 21.9%. For this half year, it was 19.1% and last year, April, September was 15.2%. The profit before tax for this quarter was INR 261 crores as compared to INR 60 crores in the previous year and INR 498 crores in the previous quarter. For the half year period, it was INR 758 crores as compared to INR 348 crores. The EBITDA per tonne for this quarter was INR 902 a tonne as compared to INR 639 last year and INR 1,229 in the previous quarter. For the 6-month period, the EBITDA per tonne was INR 1,075 as compared to INR 830 a tonne. The consolidated financial results, the revenue from operations during this quarter was higher by 18% at INR 3,019 crores as compared to INR 2,560 crores. Though in the previous quarter, it was INR 3,353 crores, it is down by about 10%. For the half year period, the revenue was higher by 19% at INR 6,372 crores as compared to INR 5,368 crores. The EBITDA during the -- this quarter was INR 447 crores as compared to INR 284 crores in the previous year, INR 688 crores in the previous quarter. For the half year period, it was INR 1,134 crores as compared to INR 770 crores. The profit after tax for this quarter was INR 159 crores as compared to INR 136 crores in the previous year, INR 324 crores in the previous quarter. For the 6-month period, it was INR 483 crores as compared to INR 321 crores. The earnings per share was INR 20.7 in this quarter, INR 16.2 previous year, INR 41.90 in the previous quarter. For the 6-month period, it was INR 62.70 as compared to INR 40.20. The debt profile, the gross debt as on 30th September was INR 5,289 crores as compared to INR 5,103 crores. And the net debt was INR 3,139 crores as compared to INR 2,551 crores. The net debt to EBITDA as on 30th September was 1.34 as compared to 1.3 as on 31st March. I would like to brief you on the status of the various projects. We have this project at Panna, 6 million tonne. This project is at advanced stage of completion. We have already commissioned 1 million grinding unit at Prayagraj in the month of October and the work on other grinding -- a grinding mill at Hamirpur is at advanced stage of completion. At the integrated plant, also the clinkerization, the work on the clinker line and the cement grinding is at advanced stage and all this should be completed by December this year. And 3 million greenfield grinding at Buxar in Bihar should get completed in the fourth quarter between January and February 2026. As regards the new project, which we have taken up at Jaisalmer, we have already placed order for most of the plant and equipment. The work at site for the integrated 4 million tonne clinker and 3 million tonne grinding has already started. The Bhoomi Pujan was done on 5th of September. All the major civil and mechanical contractors have been finalized, and the work is progressing, and we hope that this should come on stream in Q2 FY '28. We are finalizing the land for both the grinding locations. It is in advanced stage. And hopefully, the work at -- for both the grinding locations will start sometime by third quarter -- in the fourth quarter of this fiscal. We have also initiated a 6 lakh tonne greenfield wall putty plant at Nathdwara in Rajasthan. The Bhoomi Pujan for this plant was also done on 5th of September. The orders for main plant and equipment has already been placed. The construction work has started at the site, and it is expected that this project would be commissioned by Q2 FY '27. These are the major highlights on the various expansion projects. I'll be happy to answer your queries. Thank you.

[Operator Instructions] Our first question comes from the line of Harsh Mittal from Emkay Global.

The first question --

Sorry to interrupt, sir, you are sounding muffled.

Is it better now?

This is much better, sir. Please go ahead.

My first question is that what -- the other expenses seems to be higher this quarter. Can you guide us that what would be in terms of rupees per tonne, you feel that it would be reversed in the coming quarters?

So the second quarter, we have taken up the maintenance work of 3 of the kilns -- where major kilns were under maintenance in this quarter. There were some maintenance in the cement mills also. And this is the quarter when the major branding work is taken up. All the annual dealer conferences are held in this quarter being the lean period, and this is the best time that the dealers are -- they expect that all the foreign tours and all are undertaken during this quarter only because in the season, they would not like to travel. So the expenses of this quarter are higher on this reason. Yes, going forward, it will -- on a per tonne basis, this would have an impact of about INR 100 a tonne. I think going forward with the higher volumes and the amount being a bit lower. So it will have an impact of about INR 100 a tonne in the cost savings.

Sir, second question, as per our last guidance, we were about to receive -- we had a run rate of INR 300 crores of incentives per annum, right? Now given the changes in the GST structure, what is the new run rate you feel for the next 2 years? And with Jaisalmer coming in, in FY '28, how this run rate can change?

So see, marginally, this will be lower only in this fiscal. We expect that in the next fiscal, the incentive of Bihar should come in. So overall, from FY '27, we should get the benefit of the subsidy of about INR 300 crores. But in FY '28, yes, we will have some more incentives partially in the year when we commission Jaisalmer. And then we have to work out because some of the subsidies in Nimbahera will get -- that period would be over. So I think going forward, we should definitely except for about INR 50 crores lower in this fiscal. Next year -- next fiscal onwards, it should be INR 300 crores plus.

Right, right. Sir, my last question that when we announced the Jaisalmer expansion, we said that we'll be going with 4 million tonne of clinker and 7 million tonnes of grinding, 4 million tonnes being split grinding unit. So that has not been mentioned in the latest PPT. Any update on that, sir?

Sorry, it is not mentioned in the PPT, but I have said that we have already acquired most of the land for the split grinding location and the work on the 2 million tonnes each grinding in Punjab and Rajasthan. The work should commence in Q4.

And so, do we expect the commissioning in Q4 FY '28?

See, once we receive the -- get all the land, we will get the environmental clearance. So you can't apply for environment clearance before acquisition of land. So immediately on land, so we hope that in this month, by December, we should get, I mean one grinding location land will be finalized in this month and the next one by next month end. So immediately -- definitely one grinding location, which will start work in the fourth quarter. So we are targeting to start work for both the grinding locations in the fourth quarter.

[Operator Instructions] We have our next question from the line of Ritesh Shah from Investec Capital.

Sir, a couple of questions. One is what was the incentive quantum for this quarter?

It was around INR 70 crores.

INR 70 crores. Great, sir. Sir, secondly, can you update us on Toshali and Saifco? Specifically on Toshali, any update on the limestone, the quantum of CapEx that we have done so far? And incrementally, how should we look at it? And the same thing on Saifco basically, how are we looking at it?

So as far as Toshali is concerned. One, Toshali has now become part. There's the merger we had applied for the merger of Toshali, which NCLT approved in this quarter, and it is already -- the standalone results are including the working of Toshali. As far as the mining lease is concerned, I mean, though we have been trying, we will have to -- we are still now grant of lease without auction. It will not be given by the state government. But we are still discussing with the court on the long-term arrangement. If they agree to supply limestone for a long-term period of 20, 25 years at a particular price and with the price mechanism formula, then we can consider any expansion in that region. At this point of time, we are operating -- we have already done whatever small CapEx was required in the project. And we are operating the plant and the capacity is about 0.6 million tonnes. And we hope that we should be doing -- operating the plant at 80%, 85% capacity utilization.

Sir, on Saifco?

So on Saifco also, we have taken -- we have launched our brand in the month of August. So we did a relaunching and then we have started the marketing activities in the region. And so all that has been done in this quarter, in the second quarter. Now we are starting -- we are seeing that the effect of that is visible from October. The sales has already -- are good in the month of October. Now the dealers are happy with the brand. And we are trying to push -- establish our brand in the region as well as then operate and get maximum output from that plant. Maybe the capacity is -- going forward, 2, 3 months would be winter months where we will not get much production, the sale would hamper. But beyond that, we expect that we should be selling around 20,000 tonnes a month normally from that plant.

Sir, any plans that we have firmed up on the expansion over here because earlier you had indicated we can increase the capacity.

As of now, we have not firmed up. What we are doing is we plan to do some modification in the plant so that we can increase capacity by 30% in the existing capacity as far as possibility of putting up a new line of higher capacity that is on hold. We are studying that and that we may take a call going forward, but there is no immediate decision on that.

Sir, would it be possible to quantify EBITDA level numbers for both Toshali and Saifco? Just trying to understand the core business if one had to explore both this.

No, Toshali work has been done, Toshali as such when there has been no operating profit so far. We expect that going forward, this year, we should end up Toshali maybe more or less as a breakeven. And even we should see proper EBITDA coming in from Saifco post the season that means actually, it will come from major -- this year, again, for Saifco first year because we have made a lot of expenditure on the brand pool. So having spent so much amount on brand growth of Saifco for this fiscal should end up at about 00. It will only start making profit from next fiscal.

Sure, sir. This is helpful. Sir, just last question, I'll squeeze in. Sir, we saw full page ads of JK Cement pertaining to calcine clay or LC3. I think this was last month. Sir, what are our plans over here? Have we earmarked any specific percentage of our sales volumes for this? How should we look at the ramp-up over here?

No, no. See, we've been trying to work on this. We have been successful in on the development of the project. We have launched the project now for various projects and other things. We are doing a marketing effort. We don't have exact numbers as of now. But this is again, it's an opportunity for us, and we'll see how much we can sell. This is a new product line. It will be over and above the normal sales.

[Operator Instructions] Our next question is from the line of Pathanjali Srinivasan from Sundaram Mutual Fund.

I have a couple of questions. Firstly, our lead distance has kind of increased over the last couple of quarters. So any sense on whether this could reverse from Q3 onwards because our plant commissioning and all of that is happening?

So not from Q3, see our grinding unit at Bihar will get commissioned in Q4. So we would see -- because we have to see that market. And that is why the lead distance is increasing. So we would see a real benefit coming out of that. And then the grinding units, the expansion which we are doing at Prayagraj and Hamirpur, that will also get commissioned. That will definitely get -- Prayagraj already got commissioned and Hamirpur will get commissioned in this quarter. So the benefit of that marginally we'll see, but major we will see from, once we commission the Buxar grinding unit. But today, we are seeding the entire Bihar [indiscernible].

Sir, could you quantify how much it could reduce to like post this as in what would our target be?

So about 12 to 15 kilometers it should reduce.

Okay. Okay. Got it, sir. And just one more question. Our power costs looks slightly elevated on a per tonne basis. Is there anything that's causing this? Is there some bit of a short term -- are we buying any power or anything from outside or something like that?

No. See, the power and fuel cost has gone up because of the increased clinker stock. I mean this quarter, actually, the cement sales volumes are lower, but clinker production was higher. So the clinker actually stock has built up. So that has resulted into the high power and fuel cost. And because of the maintenance, I mean there was some hit on the waste heat recovery power generation also, which is a low-cost power. So these are the --

So whenever the kilns are under maintenance, the waste heat recovery doesn't go up. And waste heat is the major green power and at no cost.

Is it possible to quantify what the impact of this could have been, sir?

See, waste heat -- by the closure of a kiln, it is about INR 15 lakh a day loss in terms of waste heat power.

So see, in the cost mean, if you see, there is a main impact of, say, INR 10 crores to INR 12 crores on that account. Balance is because of the stock position.

About INR 30 a tonne.

[Operator Instructions] Our next question is from the line of Amit Murarka from Axis Capital.

So my first question is on regional sales split, if you can provide for 1H FY '26 in terms of North, Central, East, South?

So what is there in this -- the major increase has been in terms of South and Central India. The North, the growth is at par is flattish at about the market about 5% to 6%. But the major -- because last year, our South plant in Q2 was under maintenance and the sales were quite low. So one, because of that low base, we see a major increase in the South sales. And then definitely, the Central is growing. This is where the expansion has been -- company has made investments. So that market is already growing. So the major growth is coming from growth in Central and South.

Sure. But could you just quantify something? I mean, ideally, if you can just give a market split, if you can?

No, we are not sharing the market split.

Okay. Okay. But Central like would still be growing in what, mid-teens or something? I mean, or rather high teens actually.

Yes, yes.

Sure. Just generally on the Jaisalmer plant, so with this new capacity that you are doing, what is the envisaged CapEx for FY '26-'27 as an annual basis? And what is the peak that you're looking at?

So FY '26-'27, there should be about INR 700 crores to INR 800 crores spent on the Jaisalmer project. And total spend is INR 4,800 crores for the indicated and the 2 split grinding locations. We would be expecting another about INR 2,500 crores to INR 2,800 crores in next fiscal and balance will get -- spill over in FY '28. This is how we see the whole CapEx. So normally, you will see that about INR 3,500 crores spend by FY '27 and remaining gets spilled over to FY '28.

Sure. And what will be the full year CapEx that we can expect then in FY '26 and FY '27?

This year, I mean, it should be in the range of INR 2,800 crores to INR 3,000 crores. And next year, it will be over INR 3,500 crores.

Okay. And peak debt number that we can think of?

So on the peak debt, we expect to -- I mean we are looking at an incremental borrowing coming in for the Jaisalmer of about INR 3,000 crores. But by the time this borrowing comes, the net debt will -- should increase by about INR 2,000 crores, I think, but there will be certain repayments and all. So the net debt should increase by about INR 2,000 crores.

Okay. Okay. And just lastly, on this wave of expansions that we have seen being announced, like after a long time, we are seeing a lot of capacity being added actually in North as well, particularly with the recent announcement that UltraTech made. What is your thought on the market balance with all these new expansions coming in over the next 2 years?

See, again, those are the whether announcements have been made. Yes, mostly it will all come. There would be -- you could have a period of lower capacity utilization, and it will take time to settle down. So it would be not only for us, it would be for the industry, whatever does. So at this point of time, yes, there would be intense competition, but we are definitely prepared for it. It is not -- we were expecting as such that all the new capacities may come up, but there was no time frame as there was no official announcement by the competition. But we were looking what could be the likelihood capacities which may come. But having said so, now it is clear what capacities and the reasons are also very clear. So we'll work out our marketing strategy accordingly.

[Operator Instructions] The next question is from the line of Harshal Mehta from Asian Market Securities.

A couple of questions. So my first question is on our strategy. So in terms of growth and margins, how do you see both of them? And how do we see balancing, like, balancing from both on the growth and profitability going ahead?

Sorry, your voice is not clear.

Your voice is breaking. It's not the question is not clear.

Is it better now?

Yes, marginally better.

Okay. So my first question was on our strategy. So your views around the growth margins and how do you plan to balance both of them going ahead? Second question is on non-trade business. So how do you see that business going ahead for us? And how do you see non-trade as a share moving as we start commissioning new capacities? And lastly, just a clarification on Punjab and Rajasthan grinding units. So can we expect them to commission by 4Q FY '28? So these are my questions.

So as far as strategy is concerned, our strategy has been clear that definitely with the expansion, we would definitely plan to grow higher than the market growth. So that is why so that we can see higher volumes of expansion in the market. We have been -- and the strategy would be, we have already initiated our GTM strategy for North looking into the Jaisalmer project, which is likely to come up in next 15, 18 months in [ '24 ]. So we have already started working on that so that we are able to balance both on volume growth at the same time, maintain a profitable growth. So that would be definitely our strategy. And as far as the grinding locations, what was your question on the grinding unit?

So just a clarification, like Punjab and Rajasthan grinding. Also, can we expect them to commissioned by 4Q FY '28?

Yes, yes, yes. It will get commissioned along with the clinkerization in Q2 of FY '28. But even if it gets commissioned earlier, we can supply clinker from existing Nimbahera plant, Nimbahera, Mangrol.

Sure, sir. And on non-trade business, if you can help?

So non-trade, again, non-trade is a -- today also non-trade is about 1/3 of the volume. And we have to -- along with the trade growth where you have to do a GTM study, we need to continuously work on growing the non-trade market, it's an important segment. And even going forward, where we see if large infra projects are coming up, we need to plan to be part of those projects. So you can't afford to lose any of the projects. So we would -- as a part of strategy, we'll get our product approved in all the new projects which are coming up in our region so that we are able to push material in the non-trade segment also. Though as a strategy, we would definitely like to maintain around 70:30 as a trade, non-trade ratio. But if it is marginally if we -- if the growth -- if the market growth is coming from non-trade, there may be the trade percentage may marginally reduce.

[Operator Instructions] Our next question comes from the line of Parvez Qazi from Nuvama Wealth Management.

So my first question is regarding our volume expectations for FY '26. I think earlier we had guided for about 10% volume growth. So are we maintaining that? And second is, I mean, your view on prices post Q2?

So we are still maintaining like if we see the first half, we have done a growth of about 15% FY '26. We still maintain an overall growth of about 10%. We had given a guidance of around 20 million tonnes, close to 20 million tonne volume for this fiscal, and we hope to achieve that. Your second question was?

Regarding the prices post the end of the quarter.

Regarding post, the GST reduction as we have passed on all the GST benefit to the market as was promised to the government, and we also indicated in our communication that the GST benefit has been passed on. As of now, we see there is some pressure on pricing, but post -- but there is a pressure on prices in this month. But we will have to see how things -- I mean, we expect that this should reduce going forward. And if there is any cost increase or anything, we will try and see how we can push up the pricing.