JKCEMENT

: Capacity Expansion Fuels Share Rally

's shares have surged by 47% in 2025, driven by strong project execution and a clear growth strategy. Brokerages have raised valuation multiples, citing the company's superior return on equity (ROE) and highest EBITDA per tonne among major cement players over the past decade. → Ambitious Growth and Project Execution: The company plans a sharp capacity buildout with a 16% CAGR over FY25-30, compared to 9% in the last decade. Its grey cement capacity will increase from 25.26 mt to 32 mt by FY26 with new units and debottlenecking. The board has approved a ₹4,805 crore greenfield project in Jaisalmer and other units to help the company reach its goal of 50 mtpa by 2030. → Cost Management and Profitability: The company aims to save another ₹40-50 per tonne through a higher share of blended cement, increased use of renewable energy, and automation. Two coal block allocations secured in December 2024 will improve fuel security and reduce input cost volatility. Q1 FY26 performance was healthy, with grey cement volumes up 15% and blended EBITDA per tonne at ₹1,247, a significant increase from the previous year. → Financial Outlook and Risks: JK Cement's ambitious expansion will increase its debt, but analysts expect the balance sheet to remain strong. Net debt is projected to peak at ₹4,000 crore in FY27, with a low net debt-to-EBITDA ratio of less than 1.5x. The company is guiding for a 11% YoY volume growth for FY26, outpacing the industry. However, risks include rising freight costs as the company expands into new markets and potential increases in petcoke prices. The current high valuation reflects strong execution expectations, and the company's ability to maintain its performance while scaling up will be the key test.