JK Lakshmi Cement: Prabhudas Lilladher Maintains Buy Rating, Targets Rs 765

JK Lakshmi Cement Reports Inline Q4FY26 Performance

JK Lakshmi Cement (JKLC) has reported an inline operating performance in the fourth quarter of fiscal year 2026, with a healthy volume growth of 8% year-over-year driven by the ramp-up of the Surat GU (60% CU) and continued focus on market penetration in western markets.

The company's net sales realisation (NSR) remains disappointing, improving just 1% quarter-over-quarter despite industry-wide price recovery, as pricing in JKLC's key markets such as Gujarat and Chhattisgarh/East lagged other regions amid competitive intensity. On the cost front, production and freight (P&F) costs declined led by higher renewable energy mix and operational efficiencies, while freight costs remained under control. However, higher raw material costs coupled with weak NSR resulted in earnings before interest, taxes, depreciation, and amortisation per tonne (EBITDA/t) of INR734, which is lower than the Prabhudas Lilladher estimate of INR749.

Management has indicated cost inflation of approximately INR120-130 per tonne in the first quarter of fiscal year 2027, with a higher impact likely in the second quarter of fiscal year 2027. JKLC remains focused on volume-led growth and improving operational efficiencies through higher renewable energy share and cost optimisation initiatives. However, with no major capacity additions expected in fiscal year 2027 and the next phase of expansion commissioning towards the end of fiscal year 2028, the company could face capacity constraints if demand improves meaningfully, potentially impacting market share growth. Further, rising input costs from the first quarter of fiscal year 2027 can put pressure on margins as price hikes taken so far remain insufficient to offset the inflationary impact.

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Outlook

The stock is trading at an enterprise value (EV) of 9.1x/8.6x fiscal year 2027E/28E earnings before interest, taxes, depreciation, and amortisation (EBITDA). Prabhudas Lilladher maintains a 'BUY' recommendation with a revised target price of Rs765, valuing the company at the same 10x EV of March 2028E EBITDA as management has reduced some capital expenditure amount.