Apr'25 View on J K Cements Ltd

The Company is engaged in the manufacturing and selling of Cement and Cement related products with over 4 decades of experience in cement manufacturing. It is an affiliate of the multi-disciplinary industrial conglomerate JK Organisation. • Q3FY25: EBITDA came in ahead of our estimates, led by lower costs. • Seasonal tailwinds and higher Q3FY25 exit prices should keep margins on an uptrend in near term. • The company guided for a volume growth of ~10% in FY26E. • Management maintained cost-reduction target of ~Rs150-200/ton over medium term. • We estimate EBITDA of Rs991/1,100/ton in FY25E/26E vs Rs1,040/ton in Q3FY25. • Our FV is based on 8x EV/EBITDA March 2027E; maintain SELL on expensive valuation. Q3FY25 Earnings update: Positives: • Grey cement volume at 43 lakh ton (+3.6% yoy/+13.2% qoq) in line with our estimate. • Blended cost at Rs4,726/ton decreased 6.3% qoq (-1.2% yoy). • EBITDA came in at Rs1,040/ton (+60% qoq); our estimate was Rs982/ton. Negatives: • We expect free cash flow to be negative for FY25/26E. • Standalone net debt increased by Rs64 cr and stood at Rs3,110 cr in Q4FY25.