JSW Cement Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

4 Hitendra Jariwala, Kunal Mukherjee, Narinder Singh Kahlon, Nilesh Narwekar

Analysts

9 Amit Murarka, Kunal Shah, Navin Sahadeo, Prateek Kumar, Rajesh Ravi, Raashi Chopra, Shravan Shah, Siddharth Mehrotra, Vaibhav Agarwal

Financials & KPIs

Geographic & Segment Commentary

North Region (Rajasthan): First full quarter of operations; cement volume ramp-up faster than expected with 55% average utilization (68% in June). Operating loss of ~₹40 crores includes ₹33 crores marketing spend on brand launch campaigns, ground activations, and rural cricket tournaments across 10,000 villages. North demand grew ~11% YoY versus 6% in south/west/east. Company targets EBITDA breakeven in Q2 FY27 with 60%+ utilization by year-end and clinker cost reduction post-WHR/OLBC commissioning.

GGBS (GBFS): Volume growth muted at 2.6% YoY due to RMC closures in west, aggregate availability issues in south, and unfavorable OPC-GGBS mix economics; south (60% of volumes) was the drag while west grew. FY27 growth guidance revised to high single digits (from mid-teens); 29 large infra project approvals received in Q1 with robust pipeline. Management cites strong correlation with infra capex growth for FY28+ outlook.

RMC Business: 15 plants currently (2 in north), expanding to 35. Q1 revenue ₹180 crores; FY27 target ₹1,000+ crores including captive. Commercial/dedicated units mirror cement footprint; captive units serve JSW Group projects. RMCs typically don't generate meaningful margins in first 12 months.

Company-Specific & Strategic Commentary

Capacity Expansion Roadmap: Long-term vision to reach 43.5 Mn Tonnes from current 24.1 Mn Tonnes (₹7,500-7,600 crores capex). FY27 capex guided at ~₹2,300 crores and FY28 at ~₹2,000 crores. Nagaon 1 Mn grinding capacity commissioning by end-Q2; WHR, OLBC, and AFR systems expected to commission within weeks, significantly reducing clinker costs.

Cost Optimization Program: Increasing domestic fuel share and lignite usage; switching from imported to domestic coal already initiated. Fuel cost expected to remain at Q1 levels in Q2, declining from Q3. Blended fuel cost rose to ₹1.80/Mcal from ₹1.49/Mcal QoQ.

Renewable Energy: Added 56 MW wind capacity in Q1; renewable share at 30%. Slight delays in land acquisition for earlier targets (49% by Q4 FY26, 63% by FY27) now resolved; full capacity available by September, enabling 60%+ renewable share by end-FY27.

North Incentive Eligibility: Production-linked capital subsidy of 23% on eligible capex (~₹650 crores over 10 years: ₹50 crores first 4 years, ₹65 crores, then ₹80 crores) pending eligibility certificate; documents submitted, expected within ~2 months. Additional ~₹6 crores incentives booked in Q1.

Sequencing of New Plants: Central, Northeast, and second north line all under evaluation; sequencing decision expected in coming months. Punjab land acquired (₹50-60 crores spent), awaiting environmental clearance. Nagaon 3.5 Mn project capex ₹3,500 crores (₹2,400-2,500 spent); additional 2.5 Mn at ~₹430 crores net of GST by FY28. Fujairah expansion operational within 12 months (groundbreaking done); Dolvi within 15 months.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

North Operations Profitability and Marketing Spend

• Question: What is the nature of the ₹33 crore marketing investment in north? Is the ₹40 crore loss in line with IPO expectations? What level of FY27 EBITDA can north deliver? (Prateek Kumar, Jefferies)
• Answer: Marketing spend covered new campaign launch, ground activations, village-level cricket tournaments (10,000 villages in Rajasthan, Haryana, Tangal). Spending tracked against business plan. North utilization expected at 60%+ by year-end; costs will reduce through WHR, OLBC, AFR commissioning and shift from imported coal to lignite. (Nilesh Narwekar)
• Question: Marketing spend was ₹17 crore last quarter, ₹33 crore now - what is the trajectory through Q3/Q4? (Raashi Chopra, Citigroup)
• Answer: Marketing investments already completed and will taper in following quarters. (Nilesh Narwekar)

Volume Growth and Guidance

• Question: If overall cement grows high teens including north at 60% utilization (~1.5 Mn), ex-north implies degrowth - can you clarify? (Shravan Shah, Dolat Capital)
• Answer: Management holds to high teens growth on overall company basis including GGBS; referred to offline clarification. (Nilesh Narwekar)
• Question: How will ex-north growth track for rest of the year? (Raashi Chopra, Citigroup)
• Answer: Ex-north grew 8% vs industry 6%; east and west significantly outperformed industry; south had headwinds now behind them. Company targets high teens overall company growth including north. (Nilesh Narwekar)
• Question: Is GGBS guidance revised from mid-teens to high single digits? (Siddharth Mehrotra, Kotak Securities)
• Answer: Yes, revised to high single digits for FY27 due to Q1 impacts; FY28 outlook positive correlated with infra capex growth and 29 large project approvals. (Nilesh Narwekar)

North vs South Profitability and Break-even Timeline

• Question: What is the profitability difference between north and south plants? Will marketing spend continue for years? (Sanjeev Kumar Singh, Motilal Oswal)
• Answer: South is subdued; profitability difference between north and south typically ₹600-700/tonne. North to break even at EBITDA level in Q2 (September), with March providing conviction on run-rate profitability. (Narinder Singh Kahlon)

North Capacity Utilization and Incremental Line

• Question: Q1 exit utilization was 68%, why is full-year guidance only 60%? (Siddharth Mehrotra, Kotak Securities)
• Answer: Current capacity is 2.5 Mn; 1 Mn additional grinding capacity commissioning in September/early October takes total to 3.5 Mn, hence blended 60%+ is accurate. Next 2.5 Mn expansion expected by end FY28. (Narinder Singh Kahlon)

Capex and Incentives

• Question: What is the timeline for north incentive booking? (Amit Murarka, Axis Capital)
• Answer: Eligibility certificate awaited; documents submitted and file moved a couple of levels; expected within ~2 months. Booking depends on capitalized capex - WHR, OLBC, AFR completion this quarter will determine whether ₹50 crores or less is recognized in FY27. (Narinder Singh Kahlon)
• Question: How will the capital subsidy flow through P&L? (Rajesh Ravi, HDFC Securities)
• Answer: Complex accounting treatment; will discuss with auditors before confirming whether revenue line or over asset life. (Hitendra Jariwala)

GGBS Demand Slowdown

• Question: Why was GGBS growth so slow despite strong capex and no pricing change? (Amit Murarka, Axis Capital)
• Answer: RMC closures in west, aggregate availability issues in south, and unviable OPC-flash mix economics reduced cement substitution; south (60% of volume) was primary drag. Issues corrected; July numbers showing improvement. (Nilesh Narwekar)

Fuel Costs

• Question: Fuel cost spiked sharply - what is the Q2 outlook? (Amit Murarka, Axis Capital)
• Answer: Domestic coal purchases started; no escalation beyond Q1 levels expected. Q2 in line with Q1; Q3 decline anticipated from lignite adoption and renewables. (Narinder Singh Kahlon)

RMC Business

• Question: What is the RMC outlook, plant count, and regional strategy? (Navin Sahadeo, ICICI Securities)
• Answer: 15 plants (2 in north), scaling to 35. FY27 revenue target ₹1,000+ crores including captive; RMCs don't generate meaningful margins in first 12 months. Expansion mirrors cement footprint; captive units serve JSW Group projects across west, south, east. (Narinder Singh Kahlon, Nilesh Narwekar)

JSW1 JV and Other Income

• Question: What is the ₹55 crore other income from JV deconsolidation? (Siddharth Mehrotra, Kotak Securities)
• Answer: JSW1 (JV partner) raised funds ahead of planned FY27 listing; earlier write-downs reversed as networth turned positive, recognizing ₹55 crore share per accounting standards. (Narinder Singh Kahlon)

Capacity Expansion Timeline and Priority

• Question: Which expansion is prioritized - Central, Northeast, or second north line? (Navin Sahadeo, ICICI Securities)
• Answer: All three on priority list; sequencing decision in coming months. Fujairah operational within 12 months (groundbreaking done), Dolvi within 15 months. Long-term plan completes 43.5 Mn first, next 25 Mn over following 3-4 years. (Narinder Singh Kahlon)

Utilization and Vision Timeline

• Question: Is the vision phase-one (CY28) timeline pushed out? What are Fujairah/Dolvi timelines? (Raashi Chopra, Citigroup)
• Answer: Yes, phase-one pushed beyond CY28 for prudent utilization management. Nagaon 3.5 Mn capex ₹3,500 crores with ₹2,400-2,500 spent; next 2.5 Mn at ₹430 crores net of GST. Clinker utilization 61% including Nagaon, 87% excluding. (Narinder Singh Kahlon, Nilesh Narwekar)

Key Takeaway

JSW Cement delivered a mixed Q1 FY27 with consolidated revenue up 22% YoY to ₹1,896 crores and volumes up 15% YoY to 3.81 Mn tonnes, but operating EBITDA declined 7.5% YoY to ₹299 crores (₹784/tonne) due to elevated fuel costs (₹1.80/Mcal vs ₹1.49 QoQ) and ₹33 crores of north region marketing investment. North launch exceeded expectations with 55% average utilization (68% June exit); management guides EBITDA breakeven by Q2 and 60%+ utilization by year-end as WHR/OLBC/AFR commissioning at Nagaon cuts clinker costs. GGBS growth guidance was trimmed to high single digits amid south-specific demand disruptions, though 29 large infra project approvals support recovery. The company maintains FY27 capex guidance of ₹2,300 crores toward the 43.5 Mn tonne vision, with Punjab awaiting environmental clearance and Central/Northeast sequencing decisions expected within months. Key watchpoints remain fuel cost trajectory (decline expected from Q3), north incentive recognition (₹650 crores over 10 years pending eligibility certificate), and maintaining net debt/EBITDA below 3x through the elevated capex cycle.