JK Cements Ltd Quarterly Results Q2 FY 26 stock analysis

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Sector Outlook: Positive

Strategic Expansion and Volume Growth Amid Seasonal Margin Pressure

JK Cement Ltd. (JKCE) reported an operating revenue of Rs. 3,019 crores (down 9.9% QoQ / up 17.9% YoY). The annual increase was driven by higher demand in the South and central regions during the quarter, while the sequential decline was due to low sales volume in some areas and pricing fluctuations amid seasonal headwinds. The company’s Grey Cement volume increased 16% YoY, while its White Cement and Wall Putty volumes rose 10% YoY during the quarter. Total volumes stood at 4.4 MT, compared to 5.1 MT in Q1FY26. The company reported an EBITDA of Rs. 447 crores (down 35.1% QoQ / up 57.3% YoY). Its EBITDA margin stood at 14.8%, compared to 11.1% in the same quarter of the previous year and 20.5% in the previous quarter. The company’s EBITDA/ton stood at Rs. 902 during the quarter, compared to Rs. 1,229 in Q1FY26 and Rs. 639 in Q2FY25. The annual increase was supported by improved cement realizations. However, the sequential decline was due to maintenance shutdowns at certain plants. Freight costs during the quarter stood at Rs. 652 crores (down 14.8% QoQ / up 13.3% YoY). The annual increase was driven by higher lead distances, as the company is currently supplying from farther plants, which is expected to reduce significantly after the commissioning of new plants. Power and fuel expenses during the quarter stood at Rs. 607 crores (up 1.6% QoQ / up 23.3% YoY). The increase was mainly due to higher clinker production during the quarter, while maintenance shutdowns affected power generation from waste heat recovery systems, further elevating power and fuel costs. The company’s net profit stood at Rs. 159 crores (down 50.9% QoQ / up 17.0% YoY).

Valuation and Outlook

JK Cement Ltd. delivered a mixed performance this quarter, marked by operational challenges, but also demonstrated underlying volume growth and strategic progress. Seasonal monsoon-related demand fluctuations contributed to the sequential softness, while strong annual volume growth across key product segments reflected a steady market demand. The company’s long-term trajectory remains positive, as it continues to strengthen its regional presence through capacity additions at Panna, Hamirpur, Prayagraj, and the upcoming Bihar unit, thereby reducing logistics costs and enhancing market reach. Overall, the management’s clear visibility on expansion projects and disciplined capital allocation position the company well for future growth. While near-term margins may remain under pressure due to seasonality and elevated input costs, commissioning of new capacities and ongoing cost optimization initiatives are expected to support EBITDA recovery and strengthen the company’s long-term profitability outlook.

Key concall Highlights

Capacity Expansion: The Panna integrated project (6 MT) is at an advanced stage, with all major equipment and civil work progressing well. The Prayagraj grinding unit (1 MT) was commissioned in October 2025. The Hamirpur grinding unit is at an advanced stage of completion and expected to be commissioned by December 2025. The commissioning of the Buxar (Bihar) grinding unit (3 MT) is targeted to be completed in the fourth quarter between January and February 2026. The company has started work on a new integrated 4-million-ton clinker and 3-million-ton grinding facility at Jaisalmer, with major equipment orders placed and construction underway, aiming for commissioning by Q2FY28. A 6 lakh ton greenfield wall putty plant at Nathdwara, Rajasthan, also commenced with orders placed and construction started, targeting commissioning by Q2FY27. Two split grinding units in Punjab and Rajasthan of 2 MT each are planned, with work expected to begin by Q4FY26. Pricing and Volumes: There is some current pressure on prices, post GST reduction, but the company expects to manage pricing going forward. A marginal increase in premium product sales was observed in Q2, as the company continues to push growth in this segment. Cost Optimization and Expenses: Management under its cost-saving program targeted cost of Rs. 150-200 per ton, expecting savings of Rs. 75-90 per ton in FY26 and the balance in FY27. The company continues to focus on improving fuel efficiency, optimizing lead distances, and enhancing waste heat recovery system utilization. Lead distance is expected to reduce by 12-15 km after commissioning new grinding units. CapEx Plans: The company expects an annual CapEx of around Rs. 2,800-3,000 crores in FY26 and over Rs. 3,500 crores in FY27. Total CapEx for the new large projects could sum up to about Rs. 4,800 crores, with some spillover into FY28. Other key concall highlights: Non-trade sales currently contribute about one-third of volumes, with the management aiming to maintain a 70:30 trade to non-trade mix, while ensuring participation in major infrastructure projects. At SAFCO Cement, brand relaunch and dealer activation have improved sales momentum, targeting around 20,000 tons a month post-winter. The company expects to maintain profitability in international operations despite competition and market dynamics. White cement margins have bottomed out, with pressure easing particularly in putty products. The paint business recorded around Rs. 95 crores revenue in Q2 and is progressing towards a guidance of Rs. 400 crores for FY26.