JK Cement Q1 Review – Margins Surprise; Expansion On Track: ICICI Securities

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JK Cement Ltd.’s Q1 FY23 Ebitda at Rs 4 billion, flat YoY, was better than our / consensus estimates of Rs 3.5 billion led by lower costs and better realisation.

Blended realisation rose 5.4% QoQ (up 12.4% YoY), while total cost/tonne increased only 3.4% QoQ (up 21% YoY) resulting in blended Ebitda/tonne rising 15% QoQ (down 15% YoY) to Rs 1,124/tonne (our estimate: Rs 972/tonne).

JK Cement has incurred capex of Rs 20.7 billion till date out of planned Rs 30 billion for four million tonnes Panna greenfield expansion which is likely to commission by Q4 FY23.

This would drive strong ~12% volume compound annual growth rate over FY22-FY24E for JK Cement, resulting in continued market share gains with improved profitability.

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