JSW Cement Retains Neutral Rating, Target Price Raised to Rs 137: Motilal Oswal Research
JSW Cement Expects Positive Demand Trend in Medium Term, Despite Near-Term Cost Pressures
Motilal Oswal's research report on JSW Cement (JSWC) provides insights into the company's current demand trend, expansion plans, and commissioned capacities. According to the management, JSWC has a positive outlook on cement demand in the medium term, driven by strong demand from the infrastructure, real estate, and housing segments. This growth is expected to continue, despite near-term cost pressures resulting from the West Asia crisis.
JSWC Management's Cost Reduction Measures and Capacity Growth Roadmap
The company is taking internal cost measures to partly offset the impact of near-term cost pressures. These measures include increasing the share of green power and optimizing logistics costs. Additionally, JSWC has a unique and highly differentiated Ground Granulated Blast Furnace Slag (GGBS) franchise, supported by a dominant market share, strong customer relationships, and structural growth drivers linked to increasing Ready-Mix Concrete (RMC) penetration. The company's newly commissioned integrated plant in Rajasthan is witnessing a healthy ramp-up, with its products receiving strong acceptance in northern markets and commanding prices comparable to A-category brands.
Capacity Growth Roadmap and EBITDA Estimates
JSWC management has reiterated its highly ambitious yet structured capacity growth roadmap of approximately 46 million tonnes per annum (mtpa) compared to the current 24.1 mtpa. Motilal Oswal maintains its EBITDA estimates for FY27/FY28. However, the research firm has raised EPS estimates by 12-15% for FY27/FY28 due to lower depreciation and finance cost estimates.
| Financial Estimates | FY27 | FY28 |
|---|---|---|
| EBITDA Estimates | - | - |
| EPS Estimates (previously) | - | - |
| EPS Estimates (revised) | +12-15% | +12-15% |
Recommendation
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Motilal Oswal reiterates its Neutral rating for JSW Cement with a target price of INR137, valuing the stock at 13x FY28E Enterprise Value to EBITDA.
Investor Takeaway
JSW Cement's management indicated a positive outlook on cement demand in the medium term, supported by strong demand from the infrastructure, real estate, and housing segments.
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