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

Ladies and gentlemen, good evening, and welcome to J.K. Cement Earnings Conference Call for the Quarter and 9 months ended 31st December 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 (India) Private Limited. Thank you, and over to you, sir.

Thank you, Rutuja. Good evening, everyone. On behalf of PhillipCapital (India) Private Limited, we welcome you to the Q3 and 9 months FY '26 call of J.K. 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 J.K. Cement. I would like to mention on behalf of J.K. Cement 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 developments and statements which are based on current management expectations. These statements are subject to a number of risks and uncertainties and other important factors, which may cause actual developments and results to differ materially from the statements made. J.K. Cement Limited and management of the company assumes no obligation to publicly alter or update its 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 J.K. Cement for their opening remarks, which will be followed by interactive Q&A. Thank you, and over to you, Mr. Saraogi, sir.

Thank you, Vaibhav. Good evening, and welcome to Q3 call. The Board of Directors met on 17th January to review the working for the quarter ended 31st December 2025 and 9-month period ended 31st December '25. The major highlights are -- for stand-alone, the net sales are higher by 14% over previous quarter at INR 3,132 crores as against INR 2,754 crores. And year-on-year, it is higher by 19% as the number was -- comparative numbers are INR 3,132 crores and INR 2,630 crores. For the 9-month period, the net sales is higher by 19% at INR 8,555 crores (sic) [ INR 8,955 ] as compared to INR 7,542 crores. The EBITDA during this quarter was INR 536 crores as compared to INR 440 crores in the previous quarter, an increase of 22% and it is higher at 10% year-on-year, INR 536 crores as against INR 486 crores in the previous year. For the 9-month period, the EBITDA is INR 1,648 crores as compared to INR 1,232 crores, an increase of 34%. The comparative margins are: for this quarter, 17.1%; previous quarter, 15.9%; previous year, 18.4%. For the 9-month period, the EBITDA margin is 18.4% versus 16.3% in the previous year. After adjusting depreciation, finance costs and exceptional items, exceptional item is towards the labor -- new labor code liability. The profit before tax is higher at INR 276 crores as compared to INR 261 crores, and it was -- it's lower by 5% at INR 290 crores, it was in the previous year. For the 9-month period, the profit before tax is INR 1,034 crores, as against INR 637 crores, an increase of 62%. The EPS for this quarter is INR 23.30 as compared to INR 22.70. It was INR 25.80 in the previous year and for the 9-month period, it is INR 89.10 as compared to INR 56.70. The EBITDA per tonne is INR 928 in this quarter as compared to INR 902 in the previous quarter. Previous year, it was INR 1,022. And for the 9-month period, it is INR 1,022 versus an increase of 14% as compared to INR 896 in the previous year. As far as the consolidated results are concerned, the net sales in this quarter is higher by 15% at INR 3,383 as compared to INR 2,940 crores. And even as compared to previous year, it's up by 20%. And for the 9-month period, net sales is higher by 19% at INR 9,565 crores as compared to INR 8,028 crores. The consolidated EBITDA is INR 558 crores versus INR 447 crores in the previous quarter and year-on-year, it was INR 492 crores. For the 9-month period, it is INR 1,692 crores and previous year, it was INR 1,262 crores, an increase of 34%. If we consider -- if we look at the profit before tax, consolidated is INR 268 crores for the quarter as compared to INR 243 crores and INR 279 crores in the previous quarter, INR 1,000 crores for the 9-month period as compared to INR 707 crores in the previous 9-month period. This profit after tax for the quarter and considers new labor code liability of INR 47.8 crores. If you look at the volume numbers, the Grey Cement numbers quarter-on-quarter, it is higher by 20% and year-on-year 23%. And the white business on quarter-on-quarter, it is higher by 15% and year-on-year 13%. As regards the project, the brownfield MTPA 6 million tonne expansion in Central India, out of this clinkerization unit of 3.3 million tonnes and 3 million tonnes of grinding, 1 million tonnes each at Panna, Hamirpur and Prayagraj have already been commissioned. The Buxar greenfield grinding is in advanced stage of completion, and we feel that within the next 30 days, they should get commissioned. So with this, we will -- we are confident that all the remaining work of the project at Panna, like OLBC, et cetera, would also get commissioned within February and by end of February, the entire work would be completed. We have undertaken a greenfield expansion at Jaisalmer. So here, the work has already started in full swing at the integrated site. The orders for main plant and equipment have already been placed and the civil work has already started, and we are hopeful that by -- in the -- by FY -- by September 2027 -- within September '27, this should get commissioned. We are soon going to start work at both the griding locations in Punjab and Rajasthan. So that also, I mean, we are confident that by September '27, we should be able to commission the same. As regards, we have also taken up greenfield wall putty plant in Rajasthan, and the work on the same has already been started, and we expect that by end of -- by September '26, we should be able to commission this 4 lakh tonne additional wall putty plant. These are the major highlights for the quarter. If you have any questions, we'll be happy to address the same. Thank you.

[Operator Instructions] The first question is from the line of Amit Murarka from Axis Capital.

Just on incentives booked, like could you give that number for Q3?

Q3 number of incentive is lower on account of the GST rate cut and the impact is around INR 25 crores. So last quarter number was INR 86 crores and this quarter it is...

INR 60 crores.

It was INR 86 crores in Q2, you mean?

Yes.

Okay. So INR 60 crores should be the run rate or it will go up now with the Buxar units starting in this quarter?

I think, see, Buxar, first, we would be taking the project GST credit. So in this fiscal, we don't see -- so this run rate of INR 60 should be there in this quarter.

Okay. Also on cost. So in this quarter, your other expenses have declined quite sharply while you had explained in Q2 that it was a bit elevated in Q2, but Q3 seems actually a little bit lower than what was generally expected to come through, so is it like some marketing spends kind of being lower in the quarter or anything like that, which led to this lower number? or this is a normal run rate to think of?

No, there is some marketing spend is lower because we -- it was taken up in September, it was higher, especially in the white business. Also, we see that there's a dip in the grinding cost. But in this quarter, this is a -- I think it will be higher than Q3.

Okay. And just a last question on -- for Panna line to commissioning. So your capacity mentioned in the press release is 3.3 million tonnes, but you have been saying that it has potential to do 4 million tonne. So by when can we expect that 4 million tonne potential to kind of get unlocked through debottlenecking or how will it happen?

So see, it takes some time. One year I think we don't need that extra clinker immediately. I think we would be seeing once we run the capacity at optimal rate for about 6 months-or-so. So maybe in the next fiscal, it is -- end of next fiscal, that we will see the possibility how we accelerate it to higher capacity to about 4 million tonnes. But at this point of time, we take it at 3.3 million.

Sure. But some additional equipment will be required to be added to get to 4 million tonnes?

No, no, no. Nothing. No major CapEx.

[Operator Instructions] The next question is from the line of Kunal Shah from DAM Capital.

A couple of questions. Sir, beginning with the mid-teens sort of a base of volume growth which you have achieved during F '26 or will be achieving, what sort of growth now are we targeting over F '26 to '28 from a volume perspective?

Pardon, I didn't get you.

Sir, with the mid-teen base of volume growth that we will achieve during F '26 on the Grey Cement, what sort of a growth are we targeting for '27 and '28?

So see, again, we expect the growth to be in double digits. Mid-teens, will not -- may not be possible. But definitely, like in FY '26, we end up at 20 million. And we are seeing maybe early teens maybe closer to 23 million tonnes, 22.5 million to 23 million tonnes, and 25.5 million or -- as we go, and there should be anything ranging between 12% to 15% growth.

And secondly, on the CapEx bit, we had mentioned that roughly INR 2,000 crores of net debt would be the addition during F '27 due to the Jaisalmer CapEx broadly. Now would that be the peak number or there are chances of that going up as well during F '28 given we would need or want to sort of fast track our South expansion. So all I'm just trying to understand is how the management is thinking between balance sheet over '27, '28 versus growth?

No, see. As far as we are confident, yes, definitely post commissioning of Panna, we would like to take out the further brownfield expansion. And maybe it just looks like more as you mentioned in the -- in Karnataka, where we are mostly almost sold out. So that looks -- but as far as if we see our debt profile and net debt-to-EBITDA as of 31st December, we are at 1.41. And I think by March, it could be around 1.6-or-something. And next year also, FY '27, we should be closer to 2 or reach 2. I think -- and we would get incremental volumes. Yes, because of greenfield CapEx is higher, we are not concerned, but we will not delay -- we'll definitely keep a watch on the balance sheet. But I think our journey for 50 million, I mean, still I don't think so many headwinds coming against that, we should be able -- we should be on track for that.

Understood. This is helpful. And lastly, just one bookkeeping. So in the -- like during the third quarter, you lost about 1.5%, 2% of realization, I mean just adjusting for the incentives also. But how much of that have been -- have we been able to recover during the first 15, 20-odd days of Jan, I mean, through these various price hikes? If you could just help on that?

So the price hikes have been there, but we don't gain on incentives.

No, no, which is fine. I'm just talking of adjusting for incentives?

Pardon?

Adjusting for the incentives.

Adjusting for the ex incentives, I'm saying, on the Grey Cement, ex incentives, like the realization that we have lost, how much have we been able to recover, if any, during the first fortnight of Jan?

Yes, we have been able to recover that. I think we will have the numbers, but I think there is a good -- because the major recovery has been in the non-trade sales. So that should definitely be there.

[Operator Instructions] The next question is from the line of Akshay Shetty from Mirae Assets.

I have only one question, mainly on the industry trends. Sir, from an industry perspective, how are you seeing demand trends over next 2 to 3 quarters across key regions? And also like with the multiple players announcing capacity additions, how do you see the supply situation evolving? Do you expect pricing discipline to sustain or there could be some pricing pressure increase in certain markets?

So presently, as we said, regarding demand position in the next 2, 3 quarters, we are seeing definitely a good demand in this quarter. So the March quarter, I think it could be one of the best quarters what we have ever seen. So it looks like the March. And then definitely, as the cycle goes with the March hangover though it's a good construction period, but marginally, in April, the volume dips because there's a lot of inventory of March, which is there in the market. But we do expect that year-on-year because the volumes have been lower in the April, June and July, September quarter. This year, the volume should be better year-on-year, I mean, definitely 7%, 8% that is for the industry. So this quarter, the growth -- because the base is also high, so year-on-year growth, maybe not 8%, could be 6%, 7%.

The next question is from the line of Harshal Mehta from Asian Market Securities.

Three questions from my end. First, in terms of you've seen over the couple of quarters, a lot of expansions being announced in North, especially from FY '20 to FY '29 perspective. So how do you see industry pricing discipline, that was one. Second, in terms of booking what is our current CC ratio? And do we see any risk in terms of clinker shortage for H2 FY '27? That was second. And lastly, in terms of nontrade, we have seen like very sharp jump this quarter. So do you expect our nontrade share to remain at these levels or we expect it to inch up back -- inch down to earlier levels? That was the third question.

So on your first question, lot of capacities, which are coming up. Yes, a lot of capacities have been, and if we really see -- if we look at the demand growth and say, 7% or 8%, not being one of the best markets, so even North requires an incremental 10, 12 tonnes incremental volume every year. So yes, depending on capacity which is coming up, there are -- it takes time. I think there should not be much pressure unless 1 or 2 capacities bunching up come up 1 time at a time, it may have some pressure for a quarter or 2, not beyond that. But still, we do not see any major concerns as of now.

Sir, on the CC ratio if you can help with that and do we in a risk of clinker shortage in H2 FY '27?

See, CC ratio is like 67%. And we do not have the clinker shortage. We have a complete clinker backup for our cement capacity.

Sure, sir. And on the nontrade part, if you can help with that?

So nontrade, yes, I mean, see, again, nontrade was muted for some time. Now it also at the year-end, at every level, the annual budget has to be exhausted. So this is also one of the reasons for a spurt in the nontrade demand. And then -- and last year, it was also muted because of the elections, the budgets have to be reapproved. Now most of the state's election cycle is also -- is over. So I think the nontrade demand going forward should be good, I mean, it should go in tandem with the cement consumption growth.

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

Sir, I just wanted to know how the lead distance would change for us and how will logistics costs will change post commissioning of Buxar plant? Because I believe we have been seeding this market for some time from Panna, so can you give me some color on this?

So after commissioning of Buxar, yes, the lead distance for central plant should definitely reduce because we have been feeding from Prayagraj and others. So we sent clinker directly to Buxar. So that will give us definitely a benefit. Even as we are seeing there has been a reduction in lead distance, but the freight per tonne per kilometer is different in different states. So actually, in this part, the per tonne per kilometer freight being higher. So all this may have a -- it depends on the mix, but definitely with the Buxar commissioning, we should see both reduction in lead distance as well as some reduction in the freight costs.

Got it. Sir, and was there any volumes from Panna Line-2 this quarter or was it only from the existing plants?

So there has been some in this quarter itself, there was some clinker production of over 1.5 lakh tonnes from Panna Line-2. And as we had already commissioned Hamirpur, so there were some dispatches -- incremental dispatches from Hamirpur also in this quarter.

What is the time line we can expect for this ramp-up for the plant? Because I believe there's some small works are still pending. So...

Pending where?

At Panna Line-2.

Yes, so, Panna Line-2, I said, the waste heat and the OLBC is pending, which is all the other remaining work at the plant site will get commissioned within February.

Got it. Sir, and incentives for next year, what will be your expectation?

See, it may -- incentives will definitely go down on a per tonne basis with the increased volume and everything and reduction in -- but we expect that once we have the eligibility and all the new units start getting with Buxar eligibility there, which our annual amount, which had on the present had reduced from INR 300-plus crores to about INR 240 crores, should again go up to INR 300 crores. But it may not be fully in FY '27, it may be a bit later or quarter or 2 difference could be there, but our exit run rate of FY '27, that could be INR 75 crores quarterly.

Got it, sir. Sir, just one last question. Like our volume growth has been very good. It has been like significantly higher. Any particular region where we have been able to like do better or where we have seen that growth is stronger versus other regions. Could you give some comparatives here?

No, see, major growth is coming from Central India. And as we are doing an expansion, definitely, we need to build up our customer base and our sales across all segments for even nontrade. So planning for a long-term relationship with long-term players also, we have built up those relationships which has resulted in a higher volume growth. But wherever -- I mean, yes, in this journey somewhere there are nontrade prices being under pressure, the overall realizations have been marginally lower.

Got it, sir. And just one last question, sir. Guidance for '26, we are not changing. We're sticking to 20 million. And any reason why? Because we seem to be like doing very high in terms of 9 months.

So we are not changing any guidance on the volume numbers for FY '26.

The next question is from the line of Navin Sahadeo from ICICI Securities.

Sir, a couple of questions. So first was that I think for 9 months, our volume growth is already 18%, 19%. Should we look at it only from sales -- incremental sales from new markets or new regions that we got or we got to like -- we got benefit or we could increase our market share in the existing markets as well? That was my question.

So if you look at -- yes, the major gains in the market has been from Central India. So where we are reaching out, we are going to new markets. And as we had entered, been looking to Bihar and expansion, so we have already started making our footprint stronger in Eastern UP and Bihar. So these are the -- and again, we will continue to grow over there because we feel that we are still not a major player in the market. So we would like to consolidate our position and as soon as possible, get into, if not double-digit market share, at least mid-high market share in all of the -- in the entire market. So that has been the major areas where we have grown. And we have our -- we have grown in the South there was -- the demand was good. So we have -- our numbers are higher in the South. So we have also grown in the North, but in tandem with the market.

Okay. So in North, you are saying our market share remained intact, while we would have gained incentive in South and East, of course, was altogether a new market. Is that correct understanding?

It is a new market, and it was, yes, it was not there. It's a very small number. So that is definitely there small number of Toshali. So it does help in increasing the percentage. But again, it is not material.

Right. Sir, for the North market, our channel checks were basically suggesting that December was probably a record month in the sense that we could see volumes which were similar to even March for some of the players, March '25, I mean.

So practically, we are nearly -- we have -- it has been good. All our plants [indiscernible] have been operating. So I think it's a good market. The demand is good. And it would be not only for us, I think for most of the North players, it should be, this quarter could be sort of a sold-out situation as was in the last year.

No. My question was around pricing that if that was the kind of record numbers we saw, but I think pricing failed to impress in the month of December. And January, I believe there is some price hike. So my question was what convinces us that like we'll be able to see a better pricing in January and February if it failed to impress in December?

Yes, definitely, that's a big possibility, and I hope it has happened because, one, in the last few months, the nontrade pricing, there has been a lot of pressure on the nontrade pricing. So the difference between trade, nontrade have increased a lot, which was putting pressure on the trade pricing. Still, the trade prices did not fall despite the huge difference. But now since the nontrade -- with the improved demand, the nontrade prices have improved. This should definitely be the platform for a possible increase in the trade prices. And looking to the demand, there is all possibility that the trade pricing should increase.

Understood. And just one more question, if I may. From your presentation, I was -- I mean, I'm looking at the data on petcoke and fuel costs. So my observation was that while your monthly petcoke cost in dollar terms that you are reporting is increasing. And of course, on an average basis, it is certainly going up in Q3, and there has been a rupee depreciation as well. And despite that, our cost per kcal or like the fuel cost that we gave has fallen down sequentially. So what different are we doing to get a lower cost?

No. Navin, actually, it is because of the mix because Indian fuel consumption has increased...

Central plant is actually basically more on closer to the mines. It is more on Indian coal, which is cheaper. It is -- the petcoke is mainly used in the northern plants and in South plant. But in the Central plants, it's a reverse situation where we are using the petcoke as only as a blending fuel, about 20% and AFR is also higher. So these are the 2 factors.

So as we ramp up the new kiln, which is again in Central India, we should get further benefit of domestic coal or we should see insulated...

Yes, we have a linkage domestic fuel and even the -- as of now, even the open market domestic fuel is cheaper. So being -- see, this is the advantage to be closer to the coal sources. So we are closer to the coal field. So we have an access to cheaper fuel.

Understood. And just again, one broader question, if I may. So in this quarter, as you rightly pointed, nontrade prices went down, and I can see it, of course, your mix also changed in favor of nontrade. And so my question was post GST rate cut, I thought the expectation was of seeing benefits towards premiumization, so to say, but that seems to have been on the other side, in the sense, negative. Prices in nontrade are falling much more and share of trade is also falling. So how should one look at it from that point of view?

No, no, see, yes, I mean, the nontrade -- see, incremental volume has gone into nontrade. But our premium brand volumes in absolute number the trade numbers have increased, they have not gone down. And the premium product percentage has also increased. Quarter-on-quarter, if you see, from July-September quarter, it was 14.9% against which we have done 17.3% of premium products in this quarter. And -- so there is an increase -- even if we say July, September is a lean period, if we take it year-on-year, it was 15.8%, against 15.8%, we are 17.3% of premium products.

Understood. My only -- if I may say, fear, was that as we ramp up our Panna Line-2, at least in the first year, our exposure to nontrade then could be much higher than what we saw in Q3, Q4 -- Q3? Or you think it can come down?

No, not as a percentage, it will not be. This is -- this has been -- so I don't think that as a percentage, it will increase further.

The next question is from the line of Sanjeev Singh from Motilal Oswal.

Just one clarification. So when you're saying 20 million tonne of volumes, that implies only 1%, 2% kind of a growth on a year-on-year basis. So do you -- so does it mean that given the clinker utilization rate of 97% in 3Q, probably volume growth from existing plants could be flat and the incremental volume could be from the Panna plant because at the same time, you mentioned that industry growth could be at 6%, 7%. And given JK Cement's historical growth rate, we would assume that the volume growth would be higher than what the industry is doing. So just needed one clarification on this. And secondly, if you can put out some number on what has been the pricing improvement in January so far, both in trade as well as trade set of segment?

So on the clinker, I mean, yes, definitely see the clinker, the major volumes is going to come from Central India. And in the North, it will be at the rate with the market, we're not going to lose any market share because, again, some of the -- there are twin markets and all that can be serviced accordingly. So we're not going to lose any market share either in the North or and gain -- and we will definitely be growing overall more than the market in this quarter also.

And any number to the pricing improvement, which we have seen in Jan '26?

So for pricing, see, what we are seeing from latter part of last week of a trend, which we have seen now is on the nontrade pricing, definitely about in terms of INR 15 to INR 20 improvement in the nontrade pricing and still -- and in trade, definitely, that has one. I mean, two, it has released the pressure on trade. We have really not seen any signs -- any increase in trade, but definitely since the pressure is off, it will help in some restructuring of our discounts and further and increase some of trade prices wherever possible.

[Operator Instructions] The next question is from the line of Ritesh Shah from Investec.

Sir, couple of questions. Sir, first is, would it be possible for you to dissect the fuel mix given you hinted on the linkage? So what is petcoke? How much is linkage, much is nonlinkage? And any indication of how that will play out in the next quarter?

No, see, presently, the petcoke consumption was around 60%. And balance is the Indian coal and AFR.

Okay. And sir, how much will be linkage over here?

So in case of -- I mean, I think about, of the Indian coal around 70% is linkage fuel and 30% is open market.

This helps, sir. Sir, my second question is on exceptional items. How should we read this number of INR 46 crores? Is there a retrospective element over here? How should we understand it? And why is it under exceptional?

See, this is as an exception item. This was a -- this is under the new labor code which has been effective from 21st of November. So on the new labor code, where they have spelt out the new pay and the definition of how the gratuity and the leave encasement has to be calculated, where they have said the gratuity of the total payment, 50% has to be the basic amount and the leave encasement. So there is not -- so we have broadly reviewed that, and we are still doing the final working, but we have tried -- we see that this could be our -- actually, this could be the liability on account of this revision, though we are still discussing and freezing the numbers, but this is a number, this is how we have arrived at the number.

Sure. Sir, last 2 questions, sir, CapEx number, if you could highlight for full year '26, '27, '28? And if you could just dissect Jaisalmer out of the CapEx number, annual CapEx numbers?