JK Cement: Accumulate with a Target Price of Rs 6101 - Prabhudas Lilladher

JK Cement Reports Inline Operating Performance in Q4FY26

JK Cement (JKCE) has reported a largely inline operating performance in the fourth quarter of fiscal year 2026, driven by strong grey cement volume growth of 13% year-over-year. This growth is attributed to healthy demand and the company's extended footprint in Central and Eastern markets.

The blended net sales realizations (NSR) declined 0.9% quarter-over-quarter, primarily due to the impact of the ongoing geopolitical situation at Fujairah on the white cement business. However, grey cement realizations improved 2.4% quarter-over-quarter, aided by a better trade mix. The company's cost performance remained largely stable, with lower freight and raw material costs partly offsetting the increase in power & fuel costs due to elevated pet coke prices. As a result, JKCE reported a consolidated blended earnings before interest, taxes, depreciation, and amortization (EBITDA) per ton of INR1,002 (previous estimate of INR1,026).

Management indicated that recent price hikes of around INR10 per bag have broadly offset the expected input cost inflation of INR150-200 per ton in the first quarter of fiscal year 2027.

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Estimate Tweaks and Outlook

In light of the recent performance, we have tweaked our estimates for fiscal year 2027 and 2028. Our revised estimates reflect higher operating expenses and higher volumes, resulting in a 2.7% decrease in earnings per share for fiscal year 2027 and a 1.2% increase for fiscal year 2028. We expect JKCE to deliver an EBITDA per volume compound annual growth rate (CAGR) of 23% over fiscal year 2026-2028.

The stock is currently trading at an enterprise value (EV) multiple of 17.6x and 13.6x its fiscal year 2027 and 2028 earnings before interest, taxes, depreciation, and amortization (EBITDA), respectively. We maintain our "Accumulate" recommendation with a revised target price of Rs6,101 (earlier Rs6,017), valuing the company at 15x its EV of fiscal year 2028 EBITDA.

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