JK Lakshmi Cement Q3 FY26 Earnings Call Summary

Summary

JK Lakshmi Cement - Q3 FY26 Earnings Call Summary Wednesday, February 04, 2026 4:00 P.M. IST

Event Participants

Executives 2 Arun Kumar Shukla (President & Director), Sudhir Bidkar (CFO)

Analysts 10 Amit Murarka, Harsh Mittal, Harshal Mehta, Kamlesh Bagmar, Parth Bhavsar, Pathanjali Srinivasan, Pushkar Jain, Rajesh Ravi, Sanjeev Singh, Tushar Chaudhari

Financials & KPIs

Geographic & Segment Commentary

• Western Market (Gujarat/Mumbai): Performance was impacted by the commissioning of the Surat grinding station in Sept 2025. Higher non-trade volumes and post-GST reduction pricing pressure in Gujarat led to a sharp realization drop.
• Northern Market (Rajasthan/Haryana/West UP): Trade prices remained relatively steady compared to other regions. Demand was temporarily affected by labor shortages due to elections in Bihar during the quarter.
• Eastern Market (Chhattisgarh/Odisha): Non-trade prices saw significant corrections, particularly in Odisha. Durg expansion remains the primary focus for regional capacity building.

Company-Specific & Strategic Commentary

• Surat Grinding Unit: Commissioned on Sept 22, 2025. The Q3 focus was on ramping up volumes (predominantly non-trade), which contributed to the temporary decline in blended realizations.
• Durg Line-2 Expansion: Total project outlay remains at ₹3,000 crores (excluding ₹300Cr for stalled conveyor belt). ₹260 crores spent in 9M FY26; ₹400 crores planned for Q4 FY26.
• Productivity & Cost Optimization: Management is undergoing a second phase of productivity improvements aimed at reducing per-ton employee costs and enhancing revenue per person.
• Decarbonization: Strategy involves pushing blended cement (PPC) into the institutional/non-trade segment, previously dominated by OPC, to reach a 67% blended mix.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Pricing & Realization

• Question: Why did realizations fall 9% QoQ when peers were more stable? (Kamlesh Bagmar)
• Answer: The fall was driven by a sharp 10%+ correction in non-trade prices post-GST reduction and a shift in mix. JKLC’s high dependence on Gujarat and the ramp-up of the new Surat plant (heavy non-trade) amplified the impact compared to diversified peers (Arun Kumar Shukla).

Expansion & CAPEX

• Question: What is the status of the Durg Line-2 project? (Rajesh Ravi)
• Answer: Equipment for the clinker unit has been ordered and excavation has started. We aim for clinker commissioning by March 2027 and the full project by March 2028 (Sudhir Bidkar).

Cost Structure

• Question: Why did freight costs fall significantly? (Rajesh Ravi)
• Answer: The drop of over ₹100/ton is due to a higher proportion of ex-factory non-trade sales and a reduction in average lead distance following the Surat unit commissioning (Arun Kumar Shukla).

Non-Cement Business

• Question: What is the margin outlook for non-cement segments? (Pushkar Jain)
• Answer: Currently at 4% EBITDA. We are focusing on value-added concrete in RMC and ramping up the Alwar Putty plant. We expect margins to reach high single digits in 2 years, though they won’t match grey cement levels (Arun Kumar Shukla).

Key Takeaway

JK Lakshmi Cement’s Q3 FY26 was characterized by a strategic volume push at the cost of short-term realizations. While clinker utilization remained high at 90%, blended realizations fell sharply by ~9% QoQ, driven by the ramp-up of the Surat grinding unit and a 400 bps shift toward the lower-priced non-trade segment. Operating costs provided a partial cushion, with power costs declining to ₹5.37 per unit and freight costs dropping due to shorter leads. The company is committed to a major expansion phase, with a targeted ₹1,600-₹1,700 crore CAPEX in FY27 to support the Durg Line-2 project. Management expects a recovery in realizations during Q4 FY26, supported by a ₹10-₹15/bag hike in non-trade prices and double-digit volume growth. Investors should monitor the impact of rising pet coke prices and the execution timeline of the Durg clinker line.