JK Cement (JKCE) reported standalone EBITDA of Rs6.75bn (up 41% YoY, albeit down 9% QoQ), beating our estimate (Rs5.9bn). Gray cement volumes were up ~15% YoY, despite the early monsoons, implying continued market share gains in core regions, incl the Bihar market. Volume growth was robust, coupled with mild pricing gains, as gray cement realization was up 0.8% QoQ (~Rs40/t). Realization gains with operating leverage benefits offset the inflation in variable costs, resulting in blended EBITDA/t of Rs1,247 (Emkay: Rs1,160), which is up 23% YoY and flat QoQ. JKCE is on track to commission the 4mtpa Panna clinker line-2 and 6mtpa grinding units (3mtpa each in Central India and Bihar) by Dec-25. Enthused by JKCE’s strong volume growth and the industry’s pricing resilience in Q2FY25TD, we raise FY26E/27E EBITDA by ~9% each and introduce FY28 estimates.
OutlookWe value JKCE at 17x (unchanged) EV/EBITDA on Q1FY28E EBITDA (rolling forward basis) and arrive at revised up target price of Rs7,300 (earlier Rs6,375; up 14.5%); maintain BUY.
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