JK Lakshmi Cement Limited (JKLAKSHMI.NS) Q2 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the JK Lakshmi Cement Limited Quarter and Half Year Ended 30 September 2025 Earnings Conference Call 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, Darwin. Good evening, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q2 and H1 FY '26 call of JK Lakshmi Cement Limited. On the call, we have with us Mr. Arun Kumar Shukla, President and Director; and Mr. Sudhir Bidkar, Executive Director, Corporate Affairs and CFO at JK Lakshmi Cement. I would like to mention on behalf of JK Lakshmi Cement Limited and its management that certain statements that may be made or discussed on this 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 Lakshmi Cement Limited and the management of the company assumes no obligation to publicly update or alter these forward-looking statements, whether as a result of new information or future events or otherwise. Also, JK Lakshmi Cement Limited has uploaded a copy of the Q2 FY '26 results presentation on the company website, which participants can download. I'll now hand over the floor to the management of JK Lakshmi Cement for their opening remarks, which will followed by interactive Q&A. Thank you, and over to you, Arun, sir.

Yes. Thanks, Vaibhav, and good afternoon to all of you. Thanks for joining this call. We have already uploaded our results on the website and all details are there with you. I think everything is there. I think we can take questions right away.

[Operator Instructions] Our first question comes from the line of Nigel Mascarenhas from [ Leo Capital ].

I just had 1 question. Can you summarize the expansion time lines and CapEx plans to get to 30 million tonnes capacity for each of the projects over the next 5 years?

Right now, we are at 18 million with the commissioning of the Surat grinding unit, which we announced in the month of September. From here, our journey with the Durg brownfield expansion will take us to 22.6 million by FY '28. And from there, we have 3 greenfield plants, Nagaur, Kutch and Assam. They will come in '29 and '30 of about 3 million each for Nagaur and Kutch and maybe about 2 million to 2.5 million. We have not yet firmed up on the size of the Assam, but in that region. So that is how we are going to reach 30 million by FY '30.

Got it. And also the expected capital outlay for the projects?

Project right now, we are talking of -- we have zeroed it only on the Durg brownfield expansion, which is costing us about INR 3,000 crores. We have not yet firmed up on the greenfield for Nagaur, Kutch and Assam.

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

So my first question is on the status of the Durg expansion. So just following up from the previous Q1 call, has the equipment order been placed now? Or what is the status of that?

Yes, you are right. You had asked this question earlier also, and we have 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 since been placed.

Okay. So which will be a kiln and grinding units and everything?

Yes.

And the time line now is March '27 for the kiln and I believe...

The Durg grinding unit, yes.

And I think even -- I think one more grinding unit, I think, is targeted in March.

Yes, which is clubbed and 1 of the 2, yes. You're right.

Right, right. Thanks for confirming that. And also for the quarter, the revenue seems to be a bit high and even there are some traded purchases in the P&L. So could you give a breakup of the cement, non-cement revenue in that context?

Non-cement revenue in this quarter was INR 153 crores.

And what was the EBITDA margin for this?

EBITDA margin there is only 4%.

4%?

Yes.

So has the cement realization been higher Q-o-Q for you then?

So what you are looking at is in blended, if you really break it up, contribution from our other businesses like SBS has gone up. It was INR 144 crores to INR 153 crores. So that is one thing. Second is, we have improved our sales days in North more than East. The proportion in case of North has gone to 69%. And North includes perhaps Gujarat also, right? So we divide that our geography into North and East, North include Gujarat. So our proportion has gone to 69% in these markets. East has gone down a little bit. So that is second. Third reason is premium proportion has gone up by 3%. If you look at last quarter premium proportion, it was 23% of rail volume. In the current quarter or just September quarter, it was at 26%. So this is second. Third, of course, I think because of the commissioning of Surat grinding station, our volume has gone up in Gujarat, which is a better realization market than us. These are the reasons, Amit.

Sure. And what is the CapEx guidance? I see in 1H, it's only -- I think the INR 250 crores kind of CapEx that I can see in the cash flow.

Yes. We are talking of about INR 1,000 crores to INR 1,200 crores in the current year, full year. First 6 months, there has not been much, you're right in the cash flow. So that is what we are talking of and maybe INR 1,300 crores to INR 1,500 crores over the next 2 years.

INR 1,300 crores to INR 1,500 crores per annum, you mean, next 2 years?

Yes.

Okay. Okay. And does this include anything for Northeast expansion or this is only those expansion?

No, no, it does include marginal expenditure for that as well.

Right, right. This INR 3,000 crores is Durg, right? I mean in that sense.

Yes, yes, as of now that is correct.

[Operator Instructions] Our next question comes from the line of Shravan Shah from Dolat Capital.

Sir, just continuing this. So out of the total INR 3,000 crores Durg CapEx, how much we have already spent till September?

September, I don't think we have spent much. I think about INR 50-odd crores, we would have done most of that...

No, till now, out of INR 3,000 crores for Durg, how much till now we have spent?

Yes, we are talking of that only, INR 50-odd crores only has been spent. Rest will come in the remaining part of the current year and next 2 years.

Okay. So total, we are saying INR 1,500 crores -- INR 1,000 crores to INR 1,200 crores for this year and next year also INR 1,300 crores to INR 1,500 crores and even for FY '28 also. So then we are not even factoring the CapEx for the Nagaur or Kutch or Assam.

This year we are only pursuing with the land acquisition. The major expenditure will happen in the last 2 years, which is '28 and '29. So we'll be focusing more on the Durg expansion brownfield up to 2028. So you can see we have talked off [ greenfield ] over the next year that is INR 3,000 crores, INR 1,000 crores to INR 1,200 crores in the current year, that is INR 4,200 crores. Out of that INR 3,000 crores goes for Durg. So remaining INR 1,200 crores is for maintenance CapEx and other small land acquisition, some ordering of equipment, even some land acquisition in Northeast and all that. But majority of that expenditure will flow in '29 and '30.

But sir, considering both these are Nagaur and Kutch are greenfield, so at least it should take 3 years in terms of the cash flow CapEx spending if we want to start by FY '30.

Initial expenditure is primarily on the land acquisition and the land development. It kick starts only when you start ordering the equipment and start -- the equipment start arriving. So it will be more rear ended rather than -- and initially, we only need to open [indiscernible] and all that. That is what we believe. It may undergo change for FY '28, maybe later as we come closer to that period -- time period.

Okay. Got it. And sir, now coming to -- on the cost front. So this quarter, also if you can specify the kcal cost because the power and fuel cost seems to have gone up significantly. So -- and even to some extent, the freight cost has also gone up Q-o-Q, I'm talking about. So I just wanted to understand how one can look at because we were having a INR 100, INR 120-odd cost saving over 12 to 18 months. So from here on, how much more savings one can look at?

Yes. So I think we mentioned last time also, those levers are there. I just mentioned a couple of minutes back that we have improved our premium product [indiscernible]. Yes, during July, September, our distribution cost has gone up, of course, lower demand.

Sir, sorry to interrupt, but we seem to have lost a few words for you in between. May I request you to please repeat the last sentence, sir?

So all those levers are going to drive performance in [indiscernible] which we discussed last time, which is about improving premium product, reducing distribution costs, working on efficiency in the plant level using technology, ESR, renewable power. I think those things remain. I think we are going to -- we are working on that, and we will continue to work on that. And whatever we have promised that 18 to 24 months' time, we are going to have at least INR 120 of savings. So that will definitely help. 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. A new brand, which we had launched, which we call Green+, that is doing very well. And that is also one of the reasons that we have been able to breathe our price gap with the competitors quite a bit, right? So that is reflecting in our [ NOD ] also, right? So all those actions are ongoing, I think. And we keep on exploring new avenues. And one of the newer avenues to my mind is technology, how we can deploy effectively all those autonomous AI, digital algorithm in our [ para ] process and grinding station. So that is the next phase of performance drivers for us going forward.

Shravan, sorry to interrupt you. Just to let you know, sir, that you have background sound on your line. May we request you to mute your line when we -- the management is addressing your question, sir.

Sure, sure. So sir, just coming back to the -- in terms of the price and the cost and ultimately, the profitability. So how one can look at -- so in 1H, if we broadly look at around INR 700-odd EBITDA per tonne. So going forward, 2 aspects. One, currently, what we understand is, in October until now the East prices have kind of has declined. So if you can confirm? And now third and fourth quarter, how one can look at in terms of both because the price if it is lower and the further cost reduction. So how one can look at the profitability?

I think, Shravan, all those actions of improving performance is a little mid- to long-term, right? So all those actions which I mentioned is not going to give benefit right away tomorrow, right? What is important for us is to really all those ongoing levers which we are working on, which again, I mentioned that improving our price positioning of Green+ newly launched brand, which is doing quite well, improving our premium product, improving supply chain efficiency. So these are the imminent things which we are working on and we'll keep on working that. Definitely, this will give some benefit in this 3 and 4 also, right? So this is one. And we have started deploying AI/ML and using technology and improving our performance. So that will give some benefit maybe going forward in the next 3 to 6 months. And all those factors we have to move along that only. You can't do much about that, and you cannot worry about what is happening outside. And our focus has been inward and which will keep on doing.

True. So in terms of current --. Yes, I got it, sir. Just one thing to understand further. Currently, the prices in East, North or wherever we are operating versus the Q2 average or maybe exit of September, how the prices are currently?

Yes. So, Shravan, trade prices are almost intact everywhere. Gujarat has gone down a little bit, but I think because of the demand pressure maybe which happens during lean period. Nontrade prices dilution has happened in almost all markets. So you can take like trade is almost intact and nontrade prices have gone down even beyond 22 September prices, right? So one was passing on benefit to our customers, which we have done. And even after that, prices have gone down in case of nontrade segment everywhere. So perhaps once demand improves, then nontrade prices will inch up for sure. This is what I believe. And November onwards, I think that the demand will look up and nontrade prices, which perhaps I think got eroded in the last maybe a month or so will come back to the normal level. That is what my thought is.

Okay. Lastly, some data points, trade sir, blending ratio, lead distance, kcal cost and green sir for Q2?

Yes. So I think you have asked everything. Our trade sales is at 53%, blended cement at 62%, premium 26%. Lead has gone down last quarter from 399 to 395 kilometers and green power is at 46%.

And kcal?

1.61.

1.61. Will it further inch up or will remain the same?

I think that depends -- sorry, just hold on. September, yes. 1.54, right.

[Operator Instructions] Our next question comes from the line of Milind S. Raginwar from BOB Capital Markets Limited.

Just if we can throw some of the line items, you mentioned INR 153 crores as the non-cement revenue. Can you please further give the breakup between RMC and the other components?

RMC INR 72 crores, AAC is INR 52 crores, rest is the others.

And can you please have this number for the September '24 quarter also, that is the year-on-year quarter?

It was -- overall, it was INR 126 crores total against INR 163 crores and RMC was INR 66 crores and AAC was INR 40 crores.

Okay. Yes. Sir, just in detail, this has been asked in the call previously, is about the bit of an inch up, which is a bit sharp on the power and fuel cost on a Q-on-Q basis. Anything specific that you would like to mention about it or call out on for that increase that we are seeing?

Yes. So one is, of course, I mentioned that my green power proportion in last quarter is only 46%, which has gone down. And that is primarily because of we take shutdown during this quarter 2, right, of all kilns. So WHRS production goes down. So this is one of the major reasons. Second, you also have less solar power generation because of the weather. So this is the second one. And third, I think we have seen that pet coke prices also have gone up a little bit. So that has impacted our power and fuel cost.

Okay. Okay. So any possibility of this normalizing in the subsequent quarter or this is going to be slight a run rate kind of for us going forward? I'm talking on a per tonne basis.

So at least on 2 counts like green power, definitely, it will improve this quarter because of more WHRS generation and more of solar availability. On fuel part and in our case, because we import pet coke from outside, that is dependent on a lot of other things, geopolitics which is existing and supply chain issues, which is there, right? Though I think pet coke prices are around $116 to $120 per tonne now, okay? But I think if that goes up, then maybe I think it will have some impact on that. Otherwise, I think we see reasonably within control in the next 2 quarters as far as WHRS, green power and other cost elements.

Okay. And on the freight side, sir, again, on a per tonne basis, both year-on-year and Q-on-Q, year-on-year is something which I want to understand more. Is there something that we try to reach out to newer geographies? Can you just -- because there is about 8%, 8.5% of jump in the freight cost on a per tonne basis?

Yes. So during this lean quarter, we definitely try to go to some of our noncore market, which is one-off things, right, okay? And that has happened in case of quarter 2 because we sold some quantity in areas where normally we don't go. And even going forward also, we don't go. So this is one. Second, some of the market we are seeding for future, which will keep continuing even coming quarters as well. Like as Mr. Bidkar mentioned that we are going to have grinding station in Bihar and then Prayagraj and somewhere in Jharkhand. So those markets, we are just have started ceding. So that will keep kind of continuing going forward also. But some of the markets are occasional markets where we have gone in the last quarter will not go when things are going to come back to the normalcy.

Fair. Sir, now on the balance sheet, we see the receivables nearly doubling from March to now. So anything specific that you want to call out on?

Nothing is specific. Generally, March, we make sure, make extra effort to ensure that it is at the lowest, but it is normal, nothing much to highlight on that.

Okay. Nothing specific that you are mentioning on this?

Yes.

Right. And sir, just finally on the conveyor belt are we in the East? Is there anything that new development that you'd like to call out on?

So I think from the last quarter when we discussed on this topic, I had mentioned that Steel Board has approved this leasing out of the land and the write-off way for that overhead conveyor belt. That is now pending with the Ministry of Steel for the final approval. And that we are pursuing to get this as fast as possible. So this is what the update is.

Sir, can I just ask one strategic question. This has been long pending. So are we giving some time line to this that at -- how much is this going to be prolonged or we will take something else as an alternative for this because this has been a bit beyond -- stretched beyond too much on a time line perspective. So anything that we are internally thinking on this?

I agree with you. I think it's taking a little longer time than what we expected, but we can't tell something which you cannot really control. I think you can just put the effort in the right direction, which we are doing. Second, I think we keep on exploring alternatives also, right? So Plan A, Plan B, Plan C kind of thing. So that is anyway I think is there. I think it's not firmed up, but yes, we do keep working on Plan B and Plan C as well.

Right. I do know that we will refrain from giving any volume guidance, but now that we have done 6.2-odd in the first half, anything we have in sight for the full year for '26?

So what I said last time, I think our growth is going to be a little higher than the industry. So that I still maintain. In the first 2 quarters, I think you have seen that we have done better than industry in terms of volume growth. And that is what I believe that in remaining quarter 2 quarters also, we'll keep that kind of momentum. But giving that definitive kind of volume, perhaps too premature now because things keep on happening, like quarter 1, you have seen a very muted growth, right? Quarter 2 was a little better for the entire industry, about 6% to 7% of volume growth. So I believe that quarter 3, quarter 4 is generally good. But this time, I think the little, I would say, nonconventional trend was that October was not that great because of, of course, Diwali and second, I think unseasonal rain, I would say, which prolonged to -- for quite some time in case of our geographies in North India, East India and part of West India, right? So with a reasonable kind of assumptions, I do believe that we'll do better than industry in the coming 2 quarters as well.

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

So just clarifying a couple of things. So you mentioned that in Q2, the geographical mix changed a bit, which led to better blended realization. So now as we kind of get out of monsoon, so will that mix go back to the older levels, which means that at least on a realization basis, I mean, that could go back to similar trends as what we saw in Q1 on a mix perspective?

Amit, you're absolutely right. And as I mentioned, that is occasional move, which we take just to improve a little bit of our utilization. Yes.

Yes. And that thought also kind of maybe changed all those a bit of freight costs and all...

Yes, definitely, yes.

Sure. And just I wanted an operational update on the OLBC. Where are we right now? And what is the visibility of the completion of the same?

So this overline conveyor belt, I mentioned just a couple of minutes back.

I'm sorry, I missed it.

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 the Steel, which may happen in the coming days and months. It's very difficult to give time line because this is something which we cannot really control. But since Board has approved Steel Board, I do believe that things would come to in place in coming months. But very difficult, Amit, to give a time line because you know that how things work.

No, no, right. Absolutely. Absolutely. And as far as that also that Agrani, that INR 125 crores payment that we had made to them. So I think that's also a recovery process right now after that lease issue that happened. So what is again the -- I mean, expectations of how that will play out?

Yes. Right now, the matter is subjudice. So we'll wait for the court verdict before we take a call or talk much on that.

Got it. Lastly, I just also wanted to get the gross debt and net debt, right? I mean I have a number with me, but just if you can spell it out.

We have posted on our website in the presentation, please.

Okay. I'll take it from there.

[Operator Instructions] Our next question comes from the line of Dharmesh Shah from JM Financial.

Congratulation on a good set of realization. Sir, it's possible to provide the geographical breakup for the regional mix for the first quarter and second quarter?

So, Dharmesh, right now, I'm not handy with those information. I'll give you separately.

Secondly, sir, we were earlier mentioning about the guidance of around INR 1,000 EBITDA per tonne for the FY '26. So the asking run rate looks very high for the second half. Are we on track for the guidance? Or how should we look at for the second half or there will be any revision in the guidance?

So that is I think we forecast things which gives a reasonable assumption. You know that now entire industry is less than INR 1,000, you know that, okay, because of whatever competitive landscape we are in. Our effort has always been to kind of be closer to our peer group in our related market. And if you look at the peer group and the market where we operate, I think we are very close to them. The gap has gone down and that gap will keep going down even going forward, right? So that is what our effort is. If entire industry is not doing so well on EBITDA, I think it's very difficult because internal efficiencies you can drive to an extent, right? But overall market has to really support conducively to go to that level. But yes, what I said, I still believe that our effort is to reach to that first milestone of INR 1,000 and being amongst top companies in terms of EBITDA per tonne. That we kind of keep that -- our ambition intact even now.

And sir, just sorry, going back to the mix perspective because when I look at the overall our trade share perspective, it has declined on a sequential basis. So I'm just still trying to understand from a realization perspective, is there will be a significant shift in the geographical mix this time?

So as I said in my previous calls also, if my nontrade improves in Gujarat, maybe you see it [indiscernible].

Sorry to interrupt, sir, but your line seems to be cracking in between. May I request you to please repeat the last sentence?

A little clearer than before?

Yes, this is clearer, sir.

Yes. Sorry for the inconvenience. So as I said, nontrade -- if I sell nontrade in Gujarat, it is better in terms of net price in case of North and West. So whenever our mix changes, even if trade, nontrade goes other way, you'll find that realization. And I said during my opening question also that because of Surat commissioning, right, and improved volume in Gujarat, you would see that our realization or the net prices have gone up, right? Though you may see or you are seeing that overall nontrade has gone up and trade has gone down. So I think we need to look at these things along with the, I would say, landscape of pricing in different markets where we operate.

Got it, sir. And sir, just last question, are we eligible for any incentive in the UCWL?

Yes, we are eligible for a capital incentive, right? We have already applied for that. And we are working towards realizing that incentive in coming months. That impact we have not taken in our P&L.

[Operator Instructions] Our next question is from the line of [ Ritesh Dhoot ], an individual investor.

In the Q1 con call, you discussed about exploring inorganic expansion. So is there any update on that now?

Yes, we keep exploring that. So that we -- that is a continuous exercise, provided that comes at the right valuation and the 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.

[Operator Instructions] Our next question comes from the line of Shravan Shah from Dolat Capital.

Sir, just to check Durg 1.2 million tonnes and Madhubani 1.2 million will come in March '27 and 1.2 million tonne Prayagraj will come in September, October '27 and Patratu will come by March '28.

Yes. Broadly, we are talking of 2.2 million by March '27 and balance by March '28.

Okay. And not because Prayagraj will not be commissioning maybe 4, 5 months earlier than the March '28.

We are trying, but difficult to say. We are trying.

Okay. Got it. And sir, broadly, if I have to look at this 3 million tonne greenfield Nagaur and Kutch, and also if you can specify how much clinker there also we are looking at and maybe Assam also 2 million, 2.5 million tonnes, roughly ballpark in terms of the CapEx size would be how much one can look at?

As I mentioned, we have not firmed it about the project cost. It will be in the range of what otherwise the greenfield cement clinker cost 3 million. So clinker would be about will be the cement. We have not firmed up in the range of anywhere between 2 million to 2.5 million cement.

Sorry, sir, are you saying clinker will be 2 million tonnes?

Yes, for Nagaur and Kutch, 2 million clinker and 3 million cement.

Okay. But in terms of -- if you look at the other companies, so around $80, $90 plus kind of would be there for greenfield per million per tonne basis if one has to look at because being a greenfield or it would be closer to $100-odd per tonne.

Since it is going to come by '29-'30, so it will be closer to $100 only. I'm not commenting on the capital cost of other company. But taking into account the inflation for next 4, 5 years, at least $100 would be there.

Yes. Because even if we, let's say, take that number also, so around INR 2,700 crores, then INR 2,700 crores, INR 5,400 crores and then maybe INR 2,000 crores to INR 6,400-odd crores, so that the entire, as you said, mostly the entire CapEx would be in FY '29 and '30 if we want to achieve a 30 million tonne?

Yes, we will be more clearer closer to maybe in 6 months or a year's time from now, we can give definitely number of CapEx for those years as well. Since the project cost is not yet firmed up and we are busy in acquiring land and taking other external clearances, it's difficult to put a number of CapEx for the year. Every 6 months to year's time, we'll definitely be able to reach as per our guidance.

Yes. But broadly, we'll not be crossing 3x net debt-to-EBITDA even whatever the -- or there is a possibility if that is likely to happen, maybe FY '30 could be FY '31 also possible.

We would much rather like to cross that 3 to 3.5 net debt-to-EBITDA line.

We have no further questions, ladies and gentlemen. I would now like to hand the conference over to Mr. Vaibhav Agarwal for closing comments. Over to you, sir.

Sir, before we end, I had one question for Arun sir. So sir, we have a feedback from our distributors and our channel partners. So except for the geographical mix, et cetera, what you have changed, we also have a feedback that you are working hard towards identifying leakages at the ground level, and that has also helped up -- basically, you are identifying a lot of conflict of interest between your ground partners or CNF agent, sales promoters, et cetera. So that effort has also helped in the realization. Is that feedback correct, sir, as per you? And is it a sustainable number? Or is it a number which can roll back in quarters to come? So how much of it is sustainable? And what do we say about this feedback, sir? That's my question.

So absolutely, I think you are right, Vaibhav. I think this ground level discipline, having less conflict between channels like multi-roll 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, I think improving our price positioning and the price perception in the market, one. And second, also further improving our efficiency of supply chain. So I think you are right. There is a lot of things to be done in this area. But good thing is, we have started that and the initial -- I would say, the impact of all these actions is very positive, and that is helping us in many ways.

So sir, I know it's difficult to identify a number or put a number to this perspective, but I just want to say a number in Q2 versus Q1 or maybe H1 versus last year, how much of gains in realization to your guess you can put to this particular area and how much is flow through market, if you can put a number just for the sake of it.

Very difficult, Vaibhav. Maybe I think I'll have a very kind of scratchy calculation, I'll give you a little. But right now, very difficult to really quantify it.

No problem, sir. Thank you very much. On behalf of PhillipCapital India Private Limited, we would like to thank the management of JK Lakshmi for the call and many thanks to the participants for joining the call. Thank you very much, sir. We don't have any further questions. Thank you. Darwin, we can now conclude the call. Thank you.

Thank you, everyone. Thank you. Bye.

Thank you. On behalf of PhillipCapital India Private Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.