Revenue
Margin
Demand
Guidance
Tone
Event Participants
Executives
2 Arun Kumar Shukla, Sudhir Bidkar
Analysts
13 Aditi (Abacus), Amit Murarka (Axis Capital), Girija Ray (Nirmal Bang Securities), Harsh Mittal (Emkay Global), Milind Raginwar (BOB Capital Markets), Nilesh Sharma (Morombo Capital), Philip Mathai (Geojit Financial), Prashar Chaudhary (Prabhudas Liladhar), Prateek Kumar (Jefferies), Rajesh Ravi (HDFC Securities), Sanjeev Kumar Singh (Motilal Oswal), Uttam Kumar Srimal (Axis Securities), Vaibhav Agarwal (PhillipCapital)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total sales volume | 35.98 lakh tonnes | ~8% YoY growth, broadly aligned with industry growth of ~8%; includes 1.63 lakh tonnes clinker |
| Cement realization | +₹20/ton QoQ | Driven by geomics optimization (lead down 20 km = ₹60-70/ton benefit) and non-trade price increases in Gujarat, Mumbai and East |
| Fuel cost | ₹1.65/kg | Up ₹0.11 QoQ from ₹1.54; Middle East conflict disrupted supply chain for imported coal and petcoke |
| Current fuel cost (Q2 FY27) | ₹1.80–1.85/kg | Rising further; petcoke at $140–145/ton, imported coal flat at $130–135/ton |
| Lead distance | 368 km | Down 20 km from 388 km QoQ on systematic geomics focus; expected to rise in monsoon quarter |
| Freight/other expenses | ₹770/ton | Up ₹30/ton despite lead reduction due to diesel price inflation and transporter rate hikes |
| Cement capacity utilization | 76% | Above industry average of 73–74% |
| Clinker utilization | 95% | Strong utilization on captive clinker |
| Petcoke mix | 16% | Up from 14% QoQ |
| Blended cement proportion | 64% | Up from 62% QoQ; trade segment is primary driver of blended volumes |
| Trade mix | 59% | Non-trade at 41%; major price increases captured in non-trade markets |
| Renewable energy share | 49% | Solar 129 MW, WHRS 45 MW, Wind 4 MW, Thermal 74 MW |
| Non-cement revenue (Q1) | ₹185 crores | RMC ₹93 crores, ASC ₹67 crores, BOP ₹23 crores; 5% EBITDA margin |
Note: Full P&L items (revenue, EBITDA, PAT, debt) were not explicitly called out on the call; the discussion focused on operational drivers.
Geographic & Segment Commentary
- Core Markets (Rajasthan, Gujarat, Chattisgarh, Haryana, Western UP): ~90% of sales concentrated in these states. Trade prices were flat in the North, improved modestly in West and East; non-trade prices rose in Gujarat, Mumbai area, East and North, supporting overall realization. The company deliberately reduced dispatches to far-off markets in Q1 to optimize lead distance, a systematic strategy tracked by market share in core markets.
- Northeast (Mahabal Cement subsidiary): 1.5 MT greenfield plant planned; two mines acquired via auction at various approval stages (mining plan, environmental clearance). Land litigation pending in Guwahati High Court — a PIL filed by nearby villages claiming rights over land acquired from local council; JK Lakshmi added as party due to Mahabal Cement subsidiary status.
- Non-Cement Business (RMC, ASC, BOP): Q1 revenue ₹185 crores at 5% EBITDA margin; full-year FY27 revenue projected at ~₹800 crores. Raw material consumption in this segment contributed to overall raw material cost inflation.
Company-Specific & Strategic Commentary
- Geomics Optimization: Systematic multi-year effort to concentrate sales in nearby markets; lead reduced 20 km to 368 km in Q1, translating to ₹60–70/ton realization benefit. Strategy adjusts seasonally — tighter geomics in demand months, broader dispersion in lean months.
- Renewable Energy Expansion: 49% of energy now from renewables. New 42 MW solar power SPV via captive route with ₹20 crore investment and less than 2-year payback; fixed tariff ₹4.10/kWh vs grid at ₹7.50/kWh, saving ₹1.65/unit. Also setting up 28 MW battery energy storage system (BESS) to maximize utilization of captive solar.
- Capacity Expansion to 30 MT by FY30: Current installed capacity at 18 MT. Ongoing projects include Durg second clinker line (9+ MTPA) and grinding at Patratu and Madhubani — major equipment ordering completed. Railway siding Phase II contingent on collaboration with SAIL and other stakeholders; overhead conveyor belt agreement pending final approval from SAIL after initial clearance.
- Capex Discipline: FY27 guidance ₹1,500 crores (₹230 crores spent in Q1; ~₹400 crores cumulative on Durg), FY28 ₹2,000 crores, FY29 ₹1,500 crores; excludes land acquisition for Kutch and Nagaur. Net debt/EBITDA capped at 2.5–2.75x.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Fuel cost (Q2 FY27) | ₹1.80–1.85/kg | Geopolitical supply chain disruption persists; limited mitigation via higher indigenous coal share and renewable energy ramp-up |
| Capex (FY27) | ₹1,500 crores | Includes Northeast expansion; excludes Kutch/Nagaur land acquisition |
| Capex (FY28) | ₹2,000 crores | Slightly higher; Durg and Northeast projects in construction phase |
| Capex (FY29) | ₹1,500 crores | Continued expansion spend |
| Non-cement revenue (FY27) | ~₹800 crores | Full-year top line across RMC, ASC and BOP |
| Capacity (FY30) | 30 million tonnes | On track; 18 MT current installed capacity |
| Net debt/EBITDA | ≤ 2.5–2.75x | Hard ceiling maintained through expansion cycle |
| Renewable energy share | Increase from 49% | Additional projects expected online in 6–8 months; 42 MW solar in ~9 months (Q1 FY28) |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical cost inflation | Middle East conflict disrupted import supply chains for coal, petcoke, explosives and chemicals. Fuel costs rose ₹0.11/kg in Q1 with a further ₹0.15–0.20/kg expected in Q2. Management believes pass-through to prices is necessary but timing is challenged by demand cyclicity. |
| Q2 demand cyclicity | July–September typically sees monsoon-related demand slowdown and annual maintenance shutdowns; this coincides with the cost spike, limiting ability to fully pass through cost increases to customers. |
| Packaging cost inflation | Granule prices rose from ~₹134 to ₹145/bag, adding ₹3.5–4 per bag cost incrementally; adds pressure to Q2 variable costs on top of fuel. |
| Land litigation (Assam) | PIL filed in Guwahati High Court by nearby villages claiming rights over land acquired for Northeast plant (Mahabal Cement); project timeline could be impacted though management expressed confidence in resolution. |
| Price realization risk | North has highest input costs; management argues North has greatest headroom for price increases, but actual price action in July–August has been flat — no downward trend but limited upward movement either. |
| Proxy advisor governance issues | Proxy advisors recommended negative voting on certain AGM resolutions despite legal compliance; all resolutions passed with overwhelming majority, but recurring pattern could create fund-flow friction. |
Q&A Highlights
Realization Improvement Drivers
- Question: Realization was up ~9% sequentially — is this geomics, product mix or pricing? (Sanjeev Kumar Singh, Motilal Oswal)
- Answer: Combination of non-trade price increases (Gujarat, Mumbai, East, North) and led optimization. Lead dropped 20 km to 368 km, contributing ₹60–70/ton. Non-trade is 41% of mix. Trade was flat in North, up slightly in West and East. (Arun Kumar Shukla)
Q2 Cost Outlook & Margin Pressure
- Question: With fuel +₹0.20/kg, packaging +₹3.5-4/bag, plus maintenance in Q2 — are we looking at significant margin decline? (Rajesh Ravi, HDFC Securities)
- Answer: Fuel will go from ₹1.65 to ₹1.80–1.85/kg. Packing cost inflation adds ~₹80/ton. Q2 has annual maintenance shutdowns and demand cyclicity. Pass-through will happen but quantum is question mark due to cycle. July–August prices haven't moved up but haven't declined. (Arun Kumar Shukla)
Capex & Expansion Updates
- Question: What capex guidance and ordering status on Durg, Northeast, railway and conveyor projects? (Amit Murarka, Axis Capital; Prashar Chaudhary, Prabhudas Liladhar)
- Answer: FY27 ₹1,500 cr, FY28 ₹2,000 cr, FY29 ₹1,500 cr (excluding Kutch/Nagaur land). Durg cumulative spend ~₹400 cr out of ~₹3,000 cr total. Major equipment ordered for Durg clinker line, Patratu and Madhubani grinding units. Railway siding contingent on SAIL collaboration; conveyor belt agreement now with SAIL awaiting final contract. (Sudhir Bidkar)
Northeast Project and Litigation
- Question: What's the status of the two northeast mines and the Assam land litigation? (Prateek Kumar, Jefferies; Milind Raginwar, BOB Capital Markets)
- Answer: Two mines acquired via auction are at different approval stages (mining plan, environmental clearance). Plant land and grinding station locations identified. PIL filed by nearby villages in Guwahati High Court claiming land rights; JK Lakshmi added as party via Mahabal Cement subsidiary. Management intends to provide discrete updates in next quarter. (Arun Kumar Shukla)
Renewable Energy & BESS
- Question: What's the cost savings and timeline for the solar SPV, and rationale for the 28 MW BESS? (Aditi, Abacus; Philip Mathai, Geojit)
- Answer: Solar SPV — 42 MW at fixed ₹4.10/kWh vs grid ₹7.50, saving ₹1.65/unit; ~₹20 cr investment, payback <2 years, implementation in 8–9 months (benefit from Q1 FY28). BESS set up because Rajasthan allows generating up to 2x contract demand; battery prevents wasting excess solar units instead of banking. (Sudhir Bidkar; Arun Kumar Shukla)
Trade vs Non-Trade Mix
- Question: Will the non-trade segment outperform trade over the next two years? (Girija Ray, Nirmal Bang Securities)
- Answer: Trade remains the focus — it sells mostly blended cement, which has better equivalent contribution considering clinker factor. Different markets will have different trade/non-trade strategies, but overall the tilt toward trade will continue despite 41% non-trade share currently. (Arun Kumar Shukla)
Proxy Advisor Governance
- Question: How does the company engage with proxy advisors given negative recommendations and some negative investor voting? (Prateek Kumar, Jefferies)
- Answer: Proxy advisors publish reports 2 days before voting and give a 24–48 hour response window. They attach company responses as addendum but rarely change recommendations — one advisor verbally agreed with company's position but said internal guidelines prevented a change. No pre-engagement mechanism exists. All resolutions passed with overwhelming majority, including special resolutions. (Sudhir Bidkar)
Raw Material & Blending
- Question: What drove raw material cost inflation, and how does blending impact it? (Milind Raginwar, BOB Capital Markets)
- Answer: Higher fly ash procurement from secondary sources during thermal plant shutdowns, gypsum mix variations based on availability, participation in fly ash auctions, diesel price impact, and increased trade sales (requiring more cementitious materials) all contributed. Blended cement share rose to 64% from 62%, necessitating additional raw material procurement. (Arun Kumar Shukla)
Key Takeaway
JK Lakshmi Cement delivered ~8% volume growth in Q1 FY27, matching industry growth, with realization up ~₹20/ton sequentially on the back of disciplined geomics optimization (lead down 20 km to 368 km) and non-trade price increases across Gujarat, Mumbai and East markets. The company absorbed a ₹0.11/kg rise in fuel cost to ₹1.65/kg, with a further escalation to ₹1.80–1.85/kg guided for Q2 as geopolitical supply disruptions and packaging inflation add ~₹150+/ton variable cost pressure. Management is confident of price pass-through but acknowledges Q2 demand cyclicity and maintenance shutdowns limit near-term margin protection. Strategic levers remain on track: 49% renewable energy share with a new 42 MW solar SPV at ₹4.10/kWh and a 28 MW BESS, Durg clinker expansion with equipment ordering complete, and Northeast greenfield progressing despite land litigation in Assam. Capex discipline holds at ₹1,500–2,000 crores annually through FY29 with net debt/EBITDA capped at 2.5–2.75x, supporting the 30 MT capacity target by FY30. Watch points include Q2 margin compression from cost pass-through timing, SAIL-dependent railway/conveyor projects, and execution of the Northeast project amid legal challenges.